Mike Hohnen

Coaching for personal growth, change and development

Leadership/Management

Applying Power & Love to the Service Profit Chain

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One of the misunderstandings that I often encounter when implementing the Service Profit Chain in organizations is that managers suddenly become reluctant to manage. I.e. they are reluctant to be directive or to set and enforce performance standards even when it is glaringly necessary.

They worry they will adversely affect the sacred employee satisfaction that is at the heart of the service profit chain thinking.

The problem is that it has exactly the opposite effect.

The team becomes uncertain, delivery of service sloppy and customer satisfaction goes out the window. And in the worst cases they conclude that creating a great place to works is a bad idea: “ just look what happens”.

They have not understood how to manage the polarities involved.

In order to explain what happens I use the work of a Adam Kahane on Power and Love.

First, we need to start with Adam Kahan’s definition of the two terms.

Power :“the drive of everything living to realize itself with increasing intensity”

Love : “the drive towards the unity of the separated”

So as we implement the service profit chain we definitely turn up the volume on the love part. In the process create a sense of unity, belonging and contribution from the ground level and up. That becomes our foundation

But now we have a situation from a polarity point of view that is often slightly lopsided. In order to balance the polarity and not end up in an anaemic, wishy-washy lovey-dovey kind of culture, it is important to increase the power side of the equation by raising the bar and setting high standards for performance and results.

When done in that order the result is a remarkable increase in commitment, motivation and performance.

This is actually quite logical if you think about it. Just feeling good (but getting nowhere) is not nearly as much fun or challenging as feeling good and achieving something significant.

So what happens is that when we increase the power side of the polarity in order to balance the love side we in fact increase employee satisfaction and loyalty as a result.

Martin Luther King put all this in a nutshell in this great quote:

”Power properly understood is nothing but the ability to achieve purpose. It is the strength required to bring about social, political and economical change…

And one of the great problems of history is that the concepts of love and power have usually been contrasted as opposites – polar opposites – so that love is identified with the resignations of power and power with the the denial of love.

Now we have to get this thing right.

What we need to realize is that power with out love is reckless and abusive and love with out power is sentimental and anemic. It is precisely this collision of immoral power with powerless morality which constitutes the major crisis of our time.”

The future of adult education is DIY

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A week or so ago I posted a video on the future of education because I found it most thought provoking. Read it here

But since then I have been wondering about what is happening to adult education, what we generally know as professional training and development. Over the past 10 to 15 years we have seen huge growth in companies specializing in all kinds of professional development: leadership communication, assertiveness etc. The list is endless. But I’ve noticed that over the past 2 years a lot of those companies are now mere shadows of themselves. They are just not doing the business that they used to. When I ask my friends and clients in the conference hotel business, they agree – that part of their market has decreased significantly.

So what has happened, have professionals stopped learning?

That is unlikely. The rate of change surrounding us is accelerating at an unprecedented rate and the need for further education and development has never been higher than it is now.

Something is changing

I think that 3 factors are influencing what is happening and that eventually will lead to a significant change in the way we think of professional development in the future:

70-20-10 – Learning frameworks is becoming a standard. That means that the focus is on, on-the-job-learning (70%) supported by peer coaching (20%) with just a dash of actual instruction added (10%).

Time – what I hear from HR managers again and again is that no matter how interesting, exotic and high flying propositions they come up with – they still have a very hard time getting people to actually sign up for the training offered. This has to do with the fact that everybody feels the pressure of more and more things that need to be done and not enough time to do them. So trainings that were previously considered a perk are now often considered an added burden.

Money  – the ROI of the stand alone 2 day training course is questioned. It is expensive to run and if on top of that you need to drag people in to actually attend – it is not the best starting point for any learning to take place.

So, invariably bosses are asking themselves could we do this differently?

My guess is that the onus is going to shift and the companies are going to come to the conclusion that they cannot take responsibility for the personal development of individuals. The competition for great jobs is only going to increase and therefore it’s going to be natural to say to those who would like the good jobs that they need to take responsibility for their own development.

Great companies will encourage and provide the space and opportunity for on-the-job learning, the best ones will also add (peer)-coaching and reflection as part of that package but the last 10% new knowledge is going to be left to the individual in some kind of DIY format.
My guess is that this will be e-learning driven to a large extent.

Not because e-learning provides the best training environment but because it solves the problem of time and money.

And in the same way that when we had to give up our music on vinyl and shift to CD’S and again to shift from CD*s to Mps3 we all cried: “Never will I live with that loss of quality” at the end of the day money and time made us accept a more convenient solution, although it was not as good as what we had.

What is your perspective on all this, I would really like to know?

Dealing with bad leadership

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Back in July I wrote a blog post inspired by a new book out by Barbara Kellerman. ( The End of Leadership)
One of the points in her book that really struck a note with me is how much focus there is on developing good leaders while we seem to be ignoring the problem of the bad leaders.

Since writing that post the issue has been rumbling round my head. And the question keeps popping up: why is it that many organisations have such a hard time identifying and dealing with the bad apples?

But now I think I may have found part of the answer.

In a HBR blog post on August 16 with the title: Are you sure you are not a bad boss? Jack Zenger and Joseph Folkman make the interesting observation that bad bosses are not so much characterized by the terrible things they do but much more by what they don’t do.

To most people a bad boss is someone who displays the kind of caricatured behavior that can be observed in television series like The Office. But according to the research done by Zenger and Folkman that type of blatantly impossible behavior only accounts for about 20% of what defines the really hopeless bosses.

By analyzing the behavior of 30,000 managers through the eyes of their peers and direct reports they came to the conclusion that bad leaders are characterized by one or more crucial omissions.

Here’s the list in order, from the most to the least fatal:

1. Failure to inspire, owing to a lack of energy and enthusiasm.
2. Acceptance of mediocre performance in place of excellent results.
3. A lack of clear vision and direction.
4. An inability to collaborate and be a team player.
5. Failure to walk the talk.
6. Failure to improve and learn from mistakes.
7. An inability to lead change or innovate owing to a resistance to new ideas.
8. A failure to develop others.
9. Inept interpersonal skills.
10. Displays of bad judgment that leads to poor decisions.

For a more detailed description of each of the ‘omissions’ you can read the full blog post here.

So my suspicion is that exactly because bad bosses are not doing something that is glaringly terrible, the manager that they report to does not feel a sense of urgency with regard to dealing with them. On the contrary when I think of my own career and other examples that come to mind a person who displays one or more of the above characteristics is exactly the direct report that one dreads dealing with.

But obviously, failing to react means that one has taken a 1st small step oneself towards becoming a bad boss…

No value no business (redux)

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Average is over!

The above title is from a recent column in the New York Times by Paul Krugman. In it Krugman makes the point that in the past and average person with an average education could do an average job and earn an average income without too much sweat. But today as digitization, automation and cheap labor is easily accessible to all it takes more than average to make it. This means writes Krugman that everyone needs to find their unique value contribution that makes them stand out in whatever is their field of employment.

If you think about it that’s not just on a personal level. That also applies to any imaginable company, product or service.

No value no business

But how do we actually define value?

Firstly, we must always keep in mind the value can only be understood from the customer perspective – which means it is highly subjective.

Secondly, in all service businesses there is a phenomenon of asymmetry. By which I mean that what the customer actually purchases is not what we sell.

The simple version of this is when you book a hotel room you are in the market for a good nights sleep but what the hotel provides you with is a room and a bed.

If we then look at the research documented in the service profit chain there is a very neat formula for understanding value from the customer perspective called the value equation:

Value Equation

Value equals Result (R) + Process (P) / ($) Price + (E) Effort

The process part can then be broken down further in to 5 components : Time, Reliability, Competency, Empathy and Proof of delivery.

With this little equation we can map any existing or future service experience/product and in the process understand what the value proposition is. And more importantly what can be tweaked in order to increase value.

The most important part is the ‘Result’ part of the equation. As consultants we can be asked to deliver what on the surface essentially seems the same service but actually provides or fulfills different result needs for different clients. (When hiring a consultant clients can be looking for, a solution, reassurance, someone to do the dirty work, an excuse to postpone something etc) so we can only deliver value once we have a very clear understanding of the Result that is to be provided. Once we know that we can tailor the process and the 5 variables that comprise the process in order to maximize the Result part.

The higher the value we provide above the line more room there is for a payment under the line.

The E-part of the equation relates to how much effort the customer needs to put in apart from what they pay for it. Simply put the easier we make their life – the more value they see.

To better understand the equation try for yourself.
If you have the guts map out your own job. If you’re less courageous just try a-product or service that your company delivers

Happy staff make more money… for you

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“…companies that effectively appreciate employee value enjoy a return on equity & assets more than triple that experienced by firms that don’t. When looking at Fortune’s ’100 Best Companies to Work For’ stock prices rose an average of 14% per year from 1998-2005, compared to 6% for the overall market.” read the Forbes article here

This is a quote from study cited by a new book out by Dr. Noelle Nelson entitled : “Make More Money by Making Your Employees Happy,

For regular readers of this blog this is a well-known theme.

I’m always amazed how much attention this kind of message actually gets: Everybody goes . ohh surprise.. look at this…happy staff is important.

Because if you think about it it is so self evident. In a hyper-competitive world where products are more lookalike than unique, ultimately what makes a difference is the relationship factor.

And the relationship factor is what takes place between your front-line employees and customers.

The missing link

What a lot of people however totally miss in this connection is what it actually takes to keep front-line employees happy and comfortable with their jobs. The big misunderstanding is that it’s a question of more money, perks or friendly pats on the back. It’s not.

As Hertzberg taught us many many years ago, the basics, money work conditions etc, need to be on par with industry standards and if you get that right you can prevent dissatisfaction – Hertzberg called these hygiene factors. But it does not create motivation or the kind of enthusiasm that is needed for front-line employees to actually enjoy building those crucial relationships with customers.

From my perspective employee satisfaction is relatively uninteresting – what really counts is employee enthusiasm. Enthusiasm is what makes a service organisation stand out head and shoulders above the rest.

And the primary driver of enthusiasm on the job – which has to do with job content , what a person is allowed to do – is that person’s immediate supervisor.

The immediate supervisor builds or kills enthusiasm.

So if we want to build a service organisation that is among the best we need to make sure that our middle management team understands the crucial role that they play in this connection.

It is as simple as that.

A hard question for you as a leader

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The name Barbara Kellerman showed up on my screen on a number of occasions this week.

The reason for this is her most recent book The end of Leadership in which she takes the whole leadership development industry (of which I am also part) to task for selling and promoting what at the end of the day turns out to be snake oil.

Leadership crisis

Her point is, that despite more than 50 years of countless leadership development courses, conferences and God knows how many books there is not much to be proud of when you look at the big picture. According to Kellerman only 7% of employees trust their employers, their leaders and managers and the vast majority of them do not consider their superiors to be either honest or competent.

Not impressive statistics by any yardstick.

But what struck me the most was this:

“Clearly one of the problems plaguing the leadership industry is its fixation on developing good leaders, while ignoring completely the problem of stopping or at least slowing bad leaders.”

Why is it that so many organisations are doing such an incredibly lousy job and weeding out the rotten apples?

Because Kellermann has a point. Time and again we see groups of managers being sent off on development courses/training but ‘Joe the terror’ is left to do what he has always done despite the fact that everybody recognises that there is a problem.

But not dealing with Joe the terror sends a very strong signal to the organisation.

One of the things that we know undermines trust dramatically is when leaders says one thing and do something completely different. They could just as well have created a huge poster and on it written: yes we send good boys and girls to leadership development courses because we know it keeps them happy and it’s the right thing to do – but the truth be told we don’t actually give a toss.
All we are looking for is results. So as long as someone is getting the numbers right they can forget about coaching, appreciative Inquiry and feed back and behave any way they like.

But getting the numbers is just one aspect.

The other part of being a good leader is relational. ( I like to call it Results vs Relations Kellerman calls it Effective and Ethical – Either way – to be a great leader you can’t have one without the other)

This point was brought home to me many years ago when I read Chip Conley’s The Rebel Rules: Daring to be Yourself in Business ( still a favourite book of mine) . In the book he has a chapter on performance management and gives an example of how they at Joie de Vivre Hotels evaluate their management teams on a 5 x 5 point grid with results on one axis and relations on the other axis. Conley makes the point that managers who do well on the results scale but badly on relationships need to be coached and made aware that they need to improve on this aspect – and ultimately, if they don’t get it right they will have to leave the organisation despite the fact that they are getting the numbers right. Anything else is shortsighted. (Obviously this also applies the other way round. If we have the nicest person on earth on our management team but who isn’t producing what needs to get done that person too must either shape up or ship out – being ethical but ineffective is also bad leadership)

The cost of bad leaders


If we’re trying to build a better service business following the principles of the service profit chain we also know that the number 1 factor affecting job satisfaction and loyalty of our best front-line people is their relationship with their immediate supervisor.
So some supervisors may be able to drive results short-term but the price they ( we ) pay is always that long-term they lose their best people. ( and we all know that losing our best people eventually leads to losing your best clients)

Furthermore by not dealing with the bad apples we send a strong signal to the other managers on the team that under performing behaviour is okay. As a result over time we develop a toxic leadership culture, with zero trust

Focusing only on bottom line results is a classic misconception. What many leaders in the service industry forget is that financials are lagging indicators – you will have had employee dissatisfaction and/or client dissatisfaction for a while before it actually shows up in your financials and by then it may be way to late to do anything much about it.

So now’s a good time to ask yourself the hard question: are you a good or a bad leader? In the sense do you deal effectively and ethically with your non-performing managers? Because if we want to rout out bad leadership and re-establish trust this is where it all begins.

It takes more than a click from your friends.

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“The more people trust you, the more they buy from you.’’?–David Ogilvy


I don’t know whether you’ve noticed but recently has been a stream of new books on the subject of trust and how trusts is an all-important factor in any customer relationship.

Why now?

Well you don’t need to spend much time web surfing the news to realise that trust and business aren’t having the best of relationships at the moment.

A big bank is caught out laundering drug money, another one for fixing the Libor rate. One of the world’s largest newspaper corporations was caught hacking mobile phones and what was supposed to be one of the worlds most reputable security firms drops the ball with only 8 days left before the Olympics.

So it is not not surprising that consumers are skeptical – in fact I guess most of us have a very clear sense that what we see in the media is probably just the tip of the iceberg.

So naturally to many consumers the question remains: Who can we trust who is it safe to do business with?

Many businesses still believe rather naively that it’s all about quality. But being able to deliver a service or product in a decent quality is just the entry ticket – it’s the bare minimum. At the end of the day what is really going to make a difference and ensure that you get the order ( or the promotion) has to do with whether you are ‘likeable’.

That, at least is the point in a new book Likeonomics that has caught my attention.

So is this a book about maximising your friend clicks on Facebook? No, not at all the author Rohit Bhargava makes it very clear that it is about something much more complex and deeper than that.

As he points out there is substantial evidence indicating that relations and not logic drive most of our decisions. Yes – we do take our decisions based on what is convincing and what we believe … But we tend to believe people we like.

So in order to be successful all we need to do is be nice?

No it’s a lot more complex than that – in the book Rohit Bhargava – in great detail and very convincingly argues that there are 5 principles that drive our total likeability score in relation to other people:

Truth – not honesty – but truth in the sense of calling it as it is. It may not always be enjoyable but some of our best friends are in fact that because they are not afraid of telling it the way they see it. In the same way we also tend to admire companies who have the guts to tell us the truth.

Relevance – how does what we do make sense or become meaningful to the receiver. In order to answer that we need to pay attention to what is going on outside of our own world. It also begs the question: relevant to whom? What is relevant to me is not necessarily relevant to you.

Unselfish – to act in such a way that benefits the other or a larger whole but not necessarily getting something in return. Think of a person that you truly appreciate. Has that person ever done something that you would characterise as unselfish? You see… now you know what is meant by that.

Simplicity – here we are talking about the simplicity that exists on the other side of complexity. Think Steve Jobs. Taking what at the time was hopelessly complicated computer operating system called DOS and deciding to make it simple and beautiful.

“I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.” – Oliver Wendell Holmes.

Timing – Great musicians, actors and players on sports teams all have this in common they are masters at timing. And you only achieved good timing when your maximum aware of what goes on around you. In that way timing is also connected to relevance. Bad timing can easily convert something that was obviously relevant to something that is now totally irrelevant.

I find this whole book fascinating. It inspired me to think about my own approach to life and business but I think more than anything else it has given me inspiration to see this as the ultimate customer service training philosophy.

If we can find a way to get frontline employees and their managers to understand and operate along these 5 principles it will result in world-class service.

I’m going to spend some more time thinking about how to do just that.

Social Media management …

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is just like Service Management

In a recent article in S+B “Brand Transformation on the Internet” Aaron Shapiro, CEO of the digital agency Huge explains the shift from customers to users – also the title of his new book – Users, Not Customers: Who Really Determines the Success of Your Business.

A key point he makes is that most business will need to see themselves as two business. Their original core product / service and then the online version of that same business – which is an interesting thought – makes a lot of sense when you think about it.

But what really caught my attention was this :

To be effective in social media, you have to empower junior people to be brand ambassadors, to communicate online rapidly. That seemingly tactical, small move can lead to massive organizational shifts. Somebody 20 levels down in the hierarchy who’s responding to a tweet has to know and understand the whole company’s strategy around things like pricing and social responsibility. There has to be a tremendous amount of training and a very big cultural shift.

This is no doubt true – but it is also the essence of what it takes to run a great service company.

Only when front line staff see themselves as brand ambassadors in everything they do, do we get that very special customer experience.

At the heart of a great customer experience is the sensation that the person who is looking after you has the knowledge, skills and authority to do what ever it takes to provide a great experience.

But that requires leadership who understand what it takes to put that in place