Look at it This Way
Observations on Strategy, Branding, Leadership and Culture
Fuzzy Strategy, Muddy Brand Position and Board Misalignment Share Blame with CEO
With Verizon’s acquisition of Yahoo, the business media are having a field day deconstructing Marissa Mayer’s tenure as CEO, questioning her leadership, her acquisitions and the decisions that she made.
While it’s clear that Ms. Mayer was unable to reverse Yahoo’s downward trajectory, all this commentary seems to ignore the fact that Ms. Mayer followed four other CEOs – including a returned founder -- who were no better able to resuscitate the internet icon. So while Ms. Mayer gets no credit (though she does get a nice exit), I don’t believe she can fairly carry all the blame.
Which playing field?
Yahoo’s troubles began long before Ms. Mayer was even a gleam in the Board’s eye. Having literally created the consumer internet as we know it, Yahoo had lost its sense of purpose. While it still owned a collection of valuable sub-brands, notably in finance and sports, these properties did not add up to a powerful brand that meant more than the sum of their parts. The game had moved on. Facebook, Google and Instagram overtook Yahoo’s relationships and ran off with their ad revenues. Social, mobile, music, commerce, content: Yahoo didn’t seem to have the right equipment. It was easy to see all the areas where Yahoo wasn’t really able to compete. But Yahoo never decided where it was going to play or how. So the board never zeroed in on what they wanted their new CEO to do for the company or what strengths they had to bring to game.
The Board and Strategic Vision
Having served on any number of search committees in the course of my career, I can attest that successful searches start with two indispensable things: clarity and coherence. If the board itself is not united around a clear vision for the future of the company – the world it will live in and its place in that world – how can they even begin to set criteria for the kind of leader they are looking for? Now, at the time of the search that led to Marissa Mayer’s selection as CEO, Yahoo’s board was rather publicly disunited: They had no clear consensus on where they saw the company going, or agreement on the kind of individual whose experience and temperament could take the company in a winning direction.
If the board itself is not united around a clear vision for the future of the company – the world it will live in and its place in that world – how can they even begin to set criteria for the kind of leader they are looking for?
When the way forward isn’t clear, the Board needs first and foremost to select a CEO who brings the strategic clarity and leadership chops to choose the path and rally the company to follow it. But Yahoo’s Board did not do that. They chose instead an executive who had achieved success within a company known (at least at the time) for laser-like focus. Talented as Mayer is, brilliant as her achievement at Google may have been, she had not really displayed any evidence of the larger strategic vision that could carve a new, winning path for Yahoo. So with a charge to put the core business back in the game, but no clear vision on anyone’s part about which game, exactly, Yahoo should play, Ms. Mayer set about tinkering at the margins: acquiring interesting companies that would seem to shore up areas in sexy sectors where Yahoo wasn’t strong; encouraging employees to propose their exciting ideas for new services or businesses for Yahoo customers. [There was no animating idea about what the Yahoo brand should stand for](http:// http://www.foxbusiness.com/features/2016/07/26/rip-yahoo-why-marissa-mayer-failed.html) or where the company should put its resources, just a sense that lots of exciting activities and new creative thinking would bubble up some great new plays.
According to Gizmodo, she acquired more than 50 companies and spent more than $50 billion The Board, was her enabler. Unclear about where the company should be going, they authorized those initiatives, possibly hoping that a few of them would win big and in so doing, indicate an exciting new direction for the company to follow. But those acquisitions and ideas, unattached as they were to a clear and coherent competitive strategy, underpinning a distinctive and compelling brand value proposition, could never give Yahoo the clout to change the game. And so the company was left scrambling to compete on the (very un-level) playing fields of others.
The three questions every Board and CEO should ask
No strategy is fool proof. And strategies can be wrong. But unless it is very very lucky – and its competitors very very unlucky -- no company can turn itself around from the kind of decline afflicting Yahoo without a focused strategy and a crystal clear vision for its brand. When a company brings in a CEO to turn things around, the board and the CEO must ask and answer these three questions:
- What game are going to play?
- Is this game worth playing?
- How will we win?
So while Marissa Mayer didn’t restore Yahoo to greatness, she doesn’t deserve all the blame for failing to do so. No one at Yahoo was dressed to play.
Reputation and Brand Risk Have Serious Business Consequences
The deepening Wells Fargo crisis is a classic -- tragically so. Virtually every experienced crisis management expert has written virtually the same advice for decades now. The rule book should be perfectly standard. Yet time after time, companies caught in the headlights persist in imagining they can play things differently.
Just to re-cap what everybody knows: When a problem becomes public...
Don't try to deny it -- it always comes out in the end, and looks so much worse when it does Try to get all of it out in the light as quickly as possible. Nothing hurts a company more than the water torture of regular new disclosures.
Act immediately to remedy the situation. This includes taking your lumps before you are forced to do so.
- Don't throw junior people under the bus in an effort to save yourself. Blaming people down the line is almost worse than denying wrong-doing in the first place. Wells Fargo's assertion that it's culture was fine, it was just bad people -- 5300 hundred of them! -- may be the most remarkable recent example, but history shows that sooner or later the problem works its way upstream to the source.
But most of all, try to reduce the likelihood that the problem will happen in the first place. This is where the Board has a role to play.!
Raising the Board's Risk Competence
The idea that Boards need to be taking a hard look at how a company's operations could put its reputation at risk is not new. But Boards traditionally focus on financial risk, and have been relatively slow to add these kinds of skills to their risk assessment agenda, possibly because the issues seem "soft" and the risks so diffuse it's hard to know where to start looking.
Every Board should begin to identify those potential areas for self harm and devise measures that can alert them to situations that can increase the potential risks.
For Wells Fargo, the warning signs were there: For several years they saw that employees were engaging in unethical -- and illegal -- behavior. The pattern persisted despite regular firing of individuals, and management was sufficiently aware that the problem was pervasive that they made a point of talking to employees about what not to do. But no one ever thought to ask if the problem was something systemic. And clearly no one contemplated that the consequences would be so great.
Yet, in retrospect, the outcome seems completely predictable.
Reputation Risk is Business Risk
Wells Fargo's inept handling of its fake account scandal has hurt more than its trusted brand. The problem has escalated from a PR crisis to a situation where they -- and the entire industry -- may face increased regulatory scrutiny and unwanted legislation.
While smarter, faster response to the original problem would have gone a long way toward lowering the temperature, the best approach would have been strategic risk assessment that would have identified this risk before it became a problem in the first place.
The Board has to ask itself how it can support Management in making sure the company is not putting itself in harm's way.
This post relates to an earlier post on Linked-In
You don’t have to ask the toothpaste how it feels when you want to change its brand identity.
But when organizations are involved, the brand stands for people. Yet, so many corporate branding programs fail to consider how branding an organization differs from branding a product. Product brands work when the customer experience matches the packaging, advertising and product performance in the hands of the consumer. Brand managers and the agencies that support them are used to controlling and modifying each of these elements as they choose. Corporate brands are built by countless interactions of people with other people – customers and clients, suppliers and distributors, shareholders and communities, and one another.
Successful corporate brands come from understanding, defining and in certain cases changing the countless daily decisions and actions of people as they interact with other people – customers and clients, suppliers and distributors, shareholders and communities, and one another.
> If your brand does not reflect your people in a way that makes them proud and passionate, they will not deliver the brand experience in the marketplace.
So in that spirit, I offer some do’s and don’ts for branding your company:
- Don’t fret too much over the name – Companies love to worry that the old name isn’t hip enough, descriptive enough, or relevant enough. I always caution companies not to discard their names too blithely. The heritage associated with the original name is often more valuable than you think; importantly, it’s often much less of an obstacle than you think. Of course sometimes you must change your name. Mergers or spin-offs often require a new identity. A shift in the core of the business might make your old name misleading: if your name is We Are Widgets and you no longer make widgets, you probably want a new name that fits better. But even if a name change is inevitable, remember that the most important thing is just to pick one – try to find something easy to say and spell – and stay with it. Over time, the company name will become identified with the character of the people it stands for.
- Don’t settle for the price of entry – Professional, ethical, intelligent, trustworthy. These and other attributes like them always score high in research. That’s because they really define the minimum qualities no chttp://tgriese.com/blog/wells_fargo_proves_boards_need_to_broaden_definition_of_riskly to find that you have staked out a permanent also-ran position that inspires neither passion in your employees nor loyalty among your customers. Of course, sadly, there are categories where "trustworthy" is a differentiating attribute. But if you want to position your company as a trustworthy partner, you'd better make sure you are running the company to promote trustworthiness (see Make it true below; see also my earlier post on Wells Fargo
- Don’t overreach –Some companies long to be more than they can be. Executive recruiters want to be organizational consultants; ad agencies want to be marketing partners; technology companies want to revolutionize everything everywhere. Aspiration is important to a strong brand, but it’s also important not to move past what the client is prepared to believe or buy – or what you can deliver. At best, you wind up looking presumptuous or silly. At worst, an overreaching strategy leads to investments in capabilities and infrastructure that never pay off.
- Don't forget the soft stuff – Contrary to many assumptions, it’s the fuzzy part – culture and values, reward and recognition, myths and heroes – that create the firmest basis for a successful and durable corporate brand. “How things get done and who gets ahead around here” communicate more powerfully and consistently than any brand print or design guidebook, however carefully written.
- Don’t confuse business problems with branding problems - Many organizations undertake brand strategy initiatives, not because the brand is in trouble, but because the business model is in trouble, and it seems easier to work on the brand._
- Think about how your mother would feel - When your mother tells her friends where you work, how do you want them to think about you? That you are a creative innovator? Dynamic and hard-charging? A valuable member of the community? A company's brand reflects on the people who work there, as well as on the people who do business with it. They want to be associated with companies whose brands match and project their self-image.
- Make hard choices – Branding is choosing: Who we serve; what’s the most important thing we do; which employees will be successful. But when people are involved, it’s hard to leave out anything or anyone. By focusing resources and investments on the things that count, clear choices sharpen the brand.
- Dare to be bold – You don’t have to overreach your industry to redefine it. Ask of yourselves: What would it take to be the Best? The Most? The Only? How could we do that?
- Live by it – Your brand isn’t what you say, it’s what you are and what you do. If your business model doesn't line up with your corporate brand position, your people will be cynical and disillusioned and your customers will figure it out and go elsewhere. So if you want to be known as an innovative risk-taker, take risks and reward risk-taking in your organization. If you want to be known as the most responsive and service-oriented, provide great service and invest in the infrastructure that makes super-responsive service possible. If you want to build long-term partnership relationships with clients, build them and don’t compensate for transactional business.
Living up to your brand can challenge everyone’s understanding of the business and the industry. But the organizations that demonstrate the courage of their convictions are the ones who transform their industries and change the competitive landscape.
And remember: You can’t enforce the brand, only inspire it: Companies – and their branding consultants -- like to focus on those aspects of the brand that can be drawn up into guidelines and enforced: the logo, the colors, the look and feel. And they do all play a role. But if the leadership doesn’t live and die by the brand every day, inspiring people toward the values and behaviors that deliver the brand experience and drive performance over the top, the brand will not stick -- or worse, it will fall apart. If you want your branding investments to pay off, put them into Leadership, not logos.
Companies Just Don't Seem to Learn
It seems another bank's plan to boost business from existing customers tripped up on perverse incentives. Citizens Financial, after bragging at an investor conference that it had contacted 300,000 customers and scheduled 80,000 "Financial Check-Ups" saw its stock skid when a number of current and past employees disclosed that a lot of those meetings had been faked.
If your people are gaming the system, blame the system, not your people
Faking appointments is hardly on the same level as faking accounts and clearly this overstatement doesn't land Citizens anywhere near Wells Fargo in the ranks of banks behaving badly. (See this earlier post and this post on Wells Fargo) But both stories represent a rational, if desperate, employee response to perverse incentives. And both stories point out what should by now be obvious management lessons:
- It's not about what you want, it's about what your customers want. Branch employees made cold calls to current customers inviting them in for a "financial check-up," but apparently, many customers weren't interested in having that little chat. Why should they? What had the bank done to engage them first on their terms? People assumed, quite rightly, that this was a telemarketing effort, designed to sell them more banking products.
- You have to earn trust, you can't claim it. I applaud any company that decides it wants a consultative relationship with its customers rather than a transactional one. But no one hands over their personal information unless they trust you have their best interests at heart. And you don’t earn trust by asking for it. You earn trust by demonstrating trustworthiness and offering something of value. Ways to demonstrate trustworthiness include doing something that benefits the other person more than you, and (oh! yes!) telling the truth, even when it’s hard.
- Reward results, not activity. Citizens Financial staked a lot on the idea of getting customers to come in for a meeting. But if I were a shareholder in Citizens Financial, I’m not sure I would be impressed about meetings. Of course you need to get meetings if you’re going to upsell a client, so meetings are an important indicator of strategic progress. Moreover, management probably believed that asking employees to book appointments was a benign, even customer-friendly, approach to business-building that mediated the pressure to produce actual revenues. (Employees reported that they felt ok about claiming false meetings because they weren’t hurting the client). But meetings are not results and the pressure to record meetings may have produced the worst of both worlds. They generated the appearance of activity whose very effort may prove to have cut the time branch teams could put into producing actual results. Even if employees were not fudging the numbers, putting pressure on them to log meetings was bound to produce a lot of spurious activity that led nowhere. A measure that evaluated the productivity of those meetings (for example: meetings-to-conversions) might have led to more accurate reporting – and perhaps more thoughtful cold-calling strategies. It goes without saying that you should only reward results achieved in accordance with your values.
- Don't underestimate the extent of the problem. Like Wells Fargo before it, Citizens Financial is dismissing the extent of the problem, claiming it is isolated to a small number of people, and pointing to their monitoring protocols that would bring to light any widespread malpractice. While there are always individual actors who cut corners. But history and personal experience suggests that when a group of employees across a range of geography are all engaged in the same practices, you can bet the behaviors are widespread and fairly well embedded in the culture. The stock market clearly reached that conclusion. Despite Citizen's assertion that their appointments weren't overstated and the faking problem wasn't widespread, the stock dropped as much as 3.3% on the news.
- If enough of your people are doing it, it's not them. Perhaps the most disappointing aspect of this story was to see management once again blaming the employees for getting it wrong, attributing the misconduct to the fact that change is hard. According to the bank, the people who faked appointments were those who “struggled in making the transition to having deep needs based conversations.” But it doesn’t sound as though those people even got to the point where they could have those conversations for which they may indeed have been well trained. The bank had failed to create the necessary conditions for getting these meetings and then blamed the employees for not having the conversation. When behaviors reach a certain critical mass (and 11 employees over multiple states suggests critical mass), you know the company is rewarding those behaviors, even if unintentionally. Rather than blame the people, look to the system and fix it.
Change is hard. Especially when you are trying to move your culture from an emphasis on shallow transactions to one that values deeper consultative encounters that lead, over time, to more – and more profitable -- business as trust and confidence grow. All the more reason it is incumbent upon management to do more than demand that employees undertake hollow gestures toward relationship building. Only management can put in place the practices and incentives that support trust-building behavior and reward the high quality business that results from it.
If your people are gaming the system, check the system, not your people.
Could the Board have helped?
Ordinarily, I wouldn’t say that a “financial check-up” promotion would rise to the Board level of discussion. But if Citizens’ management thought it important enough to feature in its investor presentations, they must have believed it sufficiently material to raise at the Board. That would have been a good moment for someone to ask if the processes, support and reward systems were really in place to produce not just the right behaviors, but the right results.
Culture counts. Getting it right takes constant work to match you practices to the outcomes you claim to value.