Being Best in Class, not just OK in Class

“If OK is the outcome of what you’re doing, scrap what you’re doing.” Voxpop, Rackspace.

Imagine that 24 senior leaders, your peers, were coming to where you work to understand what you do and how you do it. What would you tell them? How would you bring the essence of your organisation to life? What would you share (and not share!) to ensure they left feeling inspired to improve?

This is the daunting challenge we give a dozen organisations each year, so that Connect members can peek behind the curtains of places we believe are something special. Not perfect but special in how they behave with each other or with their customers or in the world and in some cases across all three. Not perfect but perhaps striving to be and certainly never content with OK.

Each year we hear new stories and take away new learning. We are also reminded of important things we’ve heard before. Below is what we found interesting this year, structured around the framework of insights and observations we call the Wavelength 10.

1: Clear and compelling purpose

If a Connect member got this far into the program without clocking that we think organisational purpose matters, we’d be amazed.

Not just any old purpose though.

Tesla wants to ‘seriously accelerate the advent of sustainable transport’. The John Lewis Partnership strives for ‘the happiness of all its members, through their worthwhile and satisfying employment in a successful business’; LEGOwants to help children release their potential by developing their creative thinking and reasoning, and sees its role as ‘reinventing the future of play’. What these have in common is that they help liberate organisations from thinking like others in their sector, they change the game giving them permission to do different.

While a purpose helps propel an organisation forward, it is typically rooted in how or why that organisation started, or in some cases even further back.

A decade ago when Jude Kelly became Artistic Director at the Southbank Centre the organisation was directionless, the building considered a carbuncle and it was not clear where to look for inspiration for change. In creating the Southbank scrolls – where Jude wrote and drew a vision for the organisation that is still referred to today – she looked forward but she also looked back. Back to the summer of 1951 to the purpose of the Festival of Britain, which took place on the Southbank. She took its aims of being ‘egalitarian, excellent and the people’s place’ and wove them into a vision that means that today the Southbank Centre is the largest single-run arts centre in the world.

Organisations can, and in our opinion should, aspire to improve the world we live in and many of the organisations we visited saw no tension between doing business and doing something more for society or the planet. As we’ll see…

2: Authentic personal action

Of course there are successful leaders in highly profitable organisations that don’t walk the talk when it comes to what’s written in their mission, vision, values. For us they are not best in class as there is more to business success than the money (although the money is of course important).

A visit to Timpson is a revelation for most Connect leaders. The unassuming high street retailer best known for shoe repairs, dry cleaning and key cutting has an ‘upside-down management system’ which places senior management firmly at the bottom making the job of the leaders to serve its employees. When John Timpson spoke to members this year he had visited 100 stores in the last month. We have met John and his son James, Timpson’s MD, many times and their focus on supporting the frontline is unequivocal. This extends beyond the store into homes as experience has taught the Timpson family that problems at work seldom start at work. Area managers have to know the names of their staff, their families and what’s going on for them in order to ensure ‘great service by great people’.

Embedded in the Four Seasons’ culture is a belief in treating others, as you would wish to be treated yourself. This is evident in how the staff respond to the daily pressure points running a high end hotel entail, pressure points like dealing with short turn around times between events, large numbers of guests arriving simultaneously, an emergency. Everyone mucks in, in irrespective of position or pay, to ensure the customer experience remains five star and to support their colleagues.

So what of Pannos Mytaros, Executive Vice President of the ECCO Production Group?! While his references to having balls and showing them (and we don’t mean of the sporting variety) may not be to everyone’s taste, it’s clear that his insistence on rebellion (to encourage innovation), being the 2% (not the 98%) and not getting too hung up on normality and what’s possible today are not just words, these are things he lives by. They also help explain why ECCO Leather is now a stellar example of bold business model innovation, as we’ll see later.

Our Best in Class organisations typically have a strong point of view on, and processes for, recruiting and ‘on-boarding’ new recruits, keeping the right people and letting go of those that don’t fit.

Recruiting & on-boarding new recruits:

“A culture is nothing else than the behaviours you accept and reject”. IKEA.

We were reminded of the value of behaviour-based interviewing, where what people say they did or would do is used to unearth motives, beliefs and personality. At IKEA this is in the obsessive pursuit of people who are other-oriented not driven by a need for status within a classic company hierarchy. At the Four Seasons they look for people who can make decisions that are right for hotel guests and the business without endlessly deferring to management. At ECCO Leather the focus is on an ability to handle ambiguity.

At the Southbank Centre what’s expected of employees could not be made more explicit. In a fittingly creative yet highly practical origami-style pamphlet, the Southbank Way sets out seven core ideas and for each what ‘The Great Way’, ‘The Good Way’, and ‘Not the Way’ behaviours look like, making explicit what’s expected of employees.

The Southbank Centre and Timpson both have systems in place to recruit from marginalised groups, as both believe putting extra effort to bring these people into the workplace is good for them and for society. Over 10% of Timpson employees are ex-offenders and through the Timpson Family Foundation it trains and recruits for its stores inside prisons (not key cutting in case you’re wondering!). It now helps others business who recognise the latent talent sitting in Britain’s prisons to do the same, including Greggs and Halfords.

For Timpson ‘On-boarding’ new recruits coming out of prison can involve meeting them at the prison gates when there is no one else who will and helping them sort out the basic infrastructure that keeps us all afloat. For the Four Seasons on-boarding new recruits means they get to stay in a hotel with their family and understand what the customer experience needs to feel like, from the other side.

Keeping the right people:

Most of the organisations we visited are good at fostering a sense of belonging for employees, and helping them feel valued. Few of them offer industry-busting incentives as a means of keeping people.

We were told at cloud storage company Rackspace that people are recruited because they are already ‘Rackers’. This perhaps explains why one employee told us how joining Rackspace “felt like coming home” and why 33% of new hires are referrals (referrals are rewarded). Creating this strong almost familial bond has to go beyond finding the right people to keeping them happy and sane once they’re there. At one end of the spectrum Rackspace has a fun budget and a physical environment deliberately designed to give customer support staff ways to let off steam and unwind (e.g. quiet zones, table football and air hockey, etc.). At the other end, a recent wellness month included Tea & Talk meetings focused on mental health.

Learning and development is another strong theme.

The Apple University was founded by Steve Jobs to inculcate employees into Apple’s business culture and educate them about its history, particularly as the company grew and the tech business changed. At Apple we heard how the University puts emphasis on recruits understanding how decisions have been made in the past, the ethos underpinning them, so they are able to make good judgements in the future.

At LEGO the focus on development never stops. If you one of LEGO’s top 20 leaders globally and you’re due to present in front of your peers at the monthly 2-3 day meeting, you must pre-nominate two people to listen to you critically. Then immediately after you’ve presented you’ll get two minutes feedback from them, in front of the other 19 including the Board and CEO, before actions are discussed. This group also recently received training on how to put forward an opposing view, even if this means making one up you don’t believe in, to ensure no stone is left unturned in ensuring the business remains successful into the future.

Letting people go:

The Timpson approach to people is direct and leaves no room for doubt. During recruitment they look for Miss Friendly, Mr Happy and Mr Up For It not not Mr Dull, Miss Fib, Mr Lazy or Mr Scruffy, and their learning centre is called ‘9s & 10s’, in recognition of the scores recruits must get to land a job at Timpson in the first place! This stance extends to getting rid of people. If you break their explicit contract – look the part, make customers happy, put the money in the till – they will do whatever it takes (that’s legal) to ensure you to leave, including moving troublesome employees to jobs at the other end of the country.

The John Lewis Partnership is owned in trust for its members, who ‘share the responsibilities of ownership as well as its rewards profit, knowledge and power’.

They look for people who are curious, collaborative and who will act as a partner in a business should – like it’s theirs. This is not for everyone and means that hard choices must be made too, as Lynne Brutman, the GM at Four Seasons put it, “I will not sacrifice a team for one person”.

4: Align relentlessly, using structures not wish-lists

The organisations we visit seldom leave important things to chance preferring to structure-in what they want to get out. While this may sound totalitarian and stifling, done with vision, precision and imagination the results can be liberating. We’ve mentioned quite a few already but here are three more that impress us.

Scaling-up culture and keeping culture at scale are challenges many of the organisations we work with face. At the Four Seasons, General Managers are the culture carriers. So, when a new hotel opens, an experienced GM is sent to work alongside the new team to ensure that systems and processes are infused with the spirit of the organisation not merely an exercise in efficiency.

In Apple stores there is a daily download before customers arrive. This is an opportunity to discuss the day ahead, share wow stories and talk about ‘detractors’ – in-store encounters rated below eight on Apple’s customer Net Promoter Score survey. If a customer rates an encounter below eight the store manager calls them and learning is shared at the daily download. This is not, however, about naming and shaming store staff given Apple’s strong focus on team, rather it is a powerful structure for continual improvement.

Apple has a habit of saying ‘no’ more than ‘yes’ to possible business opportunities. The structure behind this is simple and links to Apple’s goal, ‘to create the best products in the world that deeply enrich people’s lives’. They only want to create products that are ‘irresistible’ and that their customers have a deep emotional connection with. So when approached with a business opportunity these are some of the questions they ask:

1. Will it make a profound difference to a market? 2. Does it have potential to be a $1billion market?

If the answer to either of these is no it’s not for Apple.

5: Brilliant basics & magic touches

While it makes you feel great when every member of staff at a Four Seasons Hotel seems to know your name, this feeling won’t last long if the shower in your room doesn’t work properly, the food you want most from the menu isn’t available or you have to queue for ages to check out. The Four Seasons is a great example of how the ruthless pursuit of operational excellence combines with magic touches to consistently surprise and delight customers.

The examples below are mostly about the magic not because we think it’s more important or harder to do but because most of us know much of what is required to achieve operational excellence in our organisations, even if it doesn’t always happen right now.

Tesla wants raving fans not customers. They also know that the handover of a new car is often a stress point customers, particularly when switching to an electric vehicle. The answer? Delivery Experience Specialists dedicated to making the process brilliantly simple and enjoyable. Tesla also offers a factory tour to all new owners and provides a Ranger Service for repairs if you don’t live near a service centre.

Sticking with cars, Jaguar Land Rover owners receive an App on their smartphones just before their new car, which allows them, among other things, to start the car and warm it up from the comfort of home on a cold day. They have also designed sensors for their cars that transmit real time data on potholes to the road authorities proving that magic can have a social purpose too!

Taking magic to the nth degree, Apple designed the box of the iPhone 5 with a magnetic fastener that prolongs opening to heighten anticipation.

Finally a simple bit of magic we’ve heard many times and still love, Timpson customers are not charged for small repairs but asked instead to pop a donation in the charity box.

6: On first name terms with customers and their people

We’ve spoken quite a lot about employees but what of the customer? The following struck us as interesting examples of customer-centricity during Best In Class.

LEGO is a B2B organisation yet the number one KPI its senior leaders’ performance is measured on each month is consumer satisfaction; so whether a seven-year old girl playing with LEGO Friends in China is happy, or not. Next after this is the customer scorecard measuring how Lego is performing for retailers and distributors then LEGO’s reputation. Financials and sales come fourth and fifth.

As we learned from