How the Leadership-Profit Chain Works

November 19, 2011November 18, 2011 / Ken Blanchard / 2 Comments

For years I have said that profit is the applause you get for taking care of your customers and creating a motivating environment for your people. My son Scott worked on a project with one of our founding partners, Drea Zigarmi, who heads up our research team, to learn the relationship between leadership, employee passion, customer devotion, and what they call “organizational vitality,” which has to do with profit, performance, reputation and other observable and memorable indicators of organizational success.

When Scott and Drea looked at leadership, they looked at two aspects of leadership: Strategic leadership, which is all about vision and direction—where your organization is going. When I talk about servant leadership, I say that strategic leadership is the “leadership” part of servant leadership, because leadership is about going somewhere and if people don’t know where you are going, your leadership doesn’t really matter. The second aspect of leadership is operational leadership, which is when you say, “Okay, now we know where we are going—how do we make it happen?” In talking about servant leadership, I say that’s where you turn the traditional hierarchical pyramid upside down and that’s the “servant” part of servant leadership.

Scott and Drea found that strategic leadership—which is really important because it starts the whole process—only had an indirect relationship with organizational vitality and success. The biggest impact came from operational leadership. I think that’s because when operational leadership is done well, the hierarchy is turned upside down, leaders are working for their people and empowering and encouraging them to accomplish the vision and the goals that have been set. What happens when you empower and involve your people? They get passionate about what they’re doing because they know you care about them and you think they are important. And what do passionate employees do? They go out of their way to serve your customers. What happens then? Your customers get blown away by the legendary customer service and become raving fans—devoted customers who start telling stories to their friends about you and your people. Then that comes back and remotivates your people.

Scott and Drea’s research found that this interaction between passionate employees and devoted customers impacts organizational vitality more than anything else. That relationship really drives the bottom line—and that part is driven mainly by operational leadership. I don’t want to diminish the importance of strategic leadership, because that’s what starts the process. But as a leader, once you set that vision and those goals, don’t turn your back and run away. Stay around as a servant leader and support, encourage, and build your people up. Because they’ll be passionate, they’ll blow away your customers with their service, and—I’ll use a phrase we used back in the day—your cash register will go “Ca-ching! Ca-ching! Ca-ching!”

Why does Leadership Matter?

October 8, 2011October 4, 2011 / Ken Blanchard / 5 Comments

Even in these hard times, some people still wonder whether or not leadership really matters. Jim Collins did a good job explaining why leadership matters. He wrote the bestselling book From Good to Great. In that book, Collins talks about how great leaders have two capabilities: One is resolve, or determination to accomplish a goal, and the other is humility. He describes how leaders with resolve and humility can build a good company into a great company. But one of the best ways to appreciate the value of good leadership is when you see how fast a poor leader can take a good organization down. Collins says it takes a lot of people to move a good organization into greatness, but it can take very little time for just one lousy leader to send a great organization downhill.

Leadership is very important. Leaders have a major role in setting the vision to move toward the organization’s goals, and then creating a motivating environment for people so those goals can be reached. But boy, leaders who don’t know what they’re doing, or have big egos, can take a good company and drive it straight into the ground. So don’t kid yourself. Leadership does matter.

How to create Raving Fan customers

September 10, 2011August 26, 2011 / Ken Blanchard

To have a successful business, you don’t want satisfied customers—you want Raving Fans. I wrote a book with the title Raving Fans along with Sheldon Bowles from Winnipeg, Canada. Our belief is that you don’t want to simply satisfy your customers. You want to treat them so well that they are blown away—that they brag about you. The way to do that is to think about the customer service experience you want them to have.

In the 1970s when all the gas stations were switching to self-service gasoline, Sheldon started a chain of full-service stations called Domo Gas. Sheldon said, “Most people don’t want to go to the gas station unless they have to, so I want to give them the best service, the quickest service, and the friendliest service.” So his vision was that if you came to one of his stations, it would be like going to an Indianapolis 500 race pit stop. He hired housewives and retirees and had them all wear red jumpsuits. When a customer came in, several attendants would race out. Someone checked under the hood. Someone pumped the gas. Someone washed the windshield. Someone opened the car door, handed the customer a newspaper and a cup of coffee, and asked the customer to step out so they could give the car a quick vacuum. Do you think Sheldon made a difference across Canada? You’d better believe it! Because he didn’t just have satisfied customers, he had Raving Fans. Everybody talked about the experience of going to one of his gas stations and how they were treated.

So don’t just satisfy customers—think of how you can really blow them away and turn them into Raving Fans.