Recently my family and I, along with a couple of our friends, visited the 6th Ave district of Tacoma, WA and tried out an Argentinian restaurant called Asado. Since we just moved to the city we were trying to find some new restaurants and this one looked like a good place to start. I ordered the Sea Bass for my main course and a half a dozen oysters for an appetizer. The main courses came out from the kitchen and I noticed that I had never gotten my oysters. So, I asked the waiter and he admitted that he had completely forgotten. Now at this point the night could have gone two ways:

Option A: The waiter could have said, “I’m very sorry, I completely forgot,” and left it at that. He could have just gone on with the meal and I would receive the check and walk away feeling that while I had a great meal, it was just a bit off. Even with this option, the experience would have been a positive one overall and I probably would come back.

The waiter could have said, “I’m very sorry, I completely forgot…would you like to have them with your meal or would you like a complimentary dessert instead.” I would choose the dessert and at the end of the meal our whole party would enjoy a great chocolate souffle cake with vanilla ice cream and chocolate sauce. I would then pay and leave the restaurant having had a great meal and knowing that Asado had great service and valued my experience as their customer. Asado would have just made me their new fan and spokesperson.

The waiter at Asado was wise and chose Option B. To be honest, I really didn’t care that he had forgotten my appetizer, I was too busy enjoying my Sea Bass, but the fact that he didn’t just stop at sorry and instead took the extra step of correcting the situation made a huge impact on me and won a new customer for the restaurant.

What happened at Asado happens everyday and raises an important question, “How do you react when you fail?”  If you are in a service-related organization whether it be a restaurant, retail store or professional service, this is such an important principle to understand. And it’s deceivingly simple.

If you mess up and fall short of the customer’s expectations, sorry isn’t enough. Even if it is sincere and the mistake was honest, people only feel valued if they believe an organization is working hard to make up for their mistakes.  Don’t just say “sorry,” DO SOMETHING ABOUT IT!

By choosing Option B, a company is making an incredibly lucrative investment. For the price that it cost to make a dessert (approx $2 if I had to guess), they got an enthusiastic customer that will not only come back himself and purchase many more meals (approx $50-$70 for 2 people), but will tell friends to go as well. For a $2 investment they received a return of at least $50 and likely much more over time. What organization wouldn’t want a return of 2,300% (feel free to check my math, I did this early in the morning).

This principle doesn’t only operate in the business-customer relationship, it has consequences inside the organization itself.  As a young employee there is no doubt that you will make mistakes. In fact, as I have been exploring lately, it may be beneficial to fail in certain situations. But, when you fail and have to explain yourself to your boss, remember that sorry isn’t enough. Have a plan to fix the problem and already be in the process of implementing it.

It’s not hard to do the right thing, but it starts at the top of the organization and works its way down. And if the employee interacting directly with the customer doesn’t understand this philosophy, doesn’t feel empowered to implement it, or worse doesn’t care enough to do anything when mistakes are made, the organization suffers more than just a slight mess up, they lose the very people they are trying to serve.

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I once had a teacher in 9th grade have us write down some principles for successful living. “Test Fast, Fail Fast” I scribbled down on the back of an assignment. “Wasn’t the point of life not to fail,” I thought to myself. Like a good student though, I folded the list up and stuck it in my wallet. I still have the list in my wallet today. Over the years I have come back to the list and have begun to realize the genius in my teacher’s words, specifically his insight on failure.

You see, what my teacher was getting at was a lifestyle of trying new things without fear of failure. A constant iteration of testing, failing, learning, testing, failing, learning; and all of this very quickly. Simply put, much more is learned from trying and failing then could ever be discovered solely by planning beforehand. And if you walk out this process quickly, you arrive at a success much faster and armed with more wisdom and insight than you ever could by standing on the sidelines analyzing the “fail-free” route.

The American entrepreneurial community has caught on to this idea more than anyone, viewing failure as a badge of honor rather than a scarlet letter. I have been told that some venture capitalists refuse to fund a business proposal put forth by someone who hasn’t previously failed in at least one or two other start-up efforts. Why? The experience of failure brings with it so many side-benefits that the person who has failed is actually better equipped than someone who has never tried before.

Two other people have recently peaked my interest in failure: Brad Feld and J.K. Rowling. Feld is one of the entrepreneurs I made reference to above that has been taking a deeper look at failure on his blog, Feld Thoughts. Check out his posts on failure here.

J.K. Rowling recently gave the graduation address to the class of 2008 at Harvard. She talked about the fringe benefits of failure as well as the importance of imagination. Watch the video of her brilliant speech here. Here is one of my favorite excerpts:

You might never fail on the scale I did, but some failure in life is inevitable. It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all - in which case, you fail by default.

Over the next few months I plan on making a study of failure and sharing what I discover with all of you. I want to know how we benefit from failure and why we fear it so much as well as how to overcome that fear.

Please send me any links on failure you think might be of interest to me. And comment below with your thoughts and stories of failure and whether or not you think they were valuable.

“Westerners are often eager to blame others when something goes wrong. The attitude of “the buck stops here” is the exception, not the rule. It is just the opposite within Toyota. The greatest sign of strength is when an individual can openly address thing that did not go right, take responsibility, and propose countermeasures to prevent these things from happening again.” - Jeffrey Liker, “The Toyota Way.”

If you’ve been watching the news at all over the past couple years you’ve seen Toyota that has come to dominate the global auto industry, surpassing GM last year to become the world’s largest carmaker. As GM and Ford have struggled to keep their heads above water, cutting thousands of jobs and closing factories, Toyota has been expanding and profiting along the way.

While the American companies have been pointing to an undervalued yen as the source of their fall from the top, I think the answer to this power shift has much more to do with organizational culture and leadership than currency issues. Simply put, Toyota is a better company.

Much has been written about the organizational culture of Toyota in the last two decades, but one factor stands out from the rest as a key to their success - kaizen, the Japanese term for constant improvement.

Kaizen teaches individual skills for working effectively in small groups, solving problems, documenting and improving processes, collecting and analyzing data, and self-managing within a peer group. It pushes the decision making (or proposal making) down to the workers and requires open discussion and a group consensus before implementing any decisions. pg 24, “The Toyota Way” (emphasis mine)

The philosophy of kaizen is something that is of great benefit not only to businesses, but churches, non-profits and civic groups as well. It seems like a no-brainer, yet few organizations really practice it. Why? Here are some thoughts.

5 Barriers to Kaizen:

1. Insecure Leadership - Kaizen means that procedures and philosophies are continually questioned, debated and changed. If the leadership can’t handle having their ideas challenged on a frequent basis then the organization is destined to become irrelevant. Leaders must be secure enough to know that the free debate of ideas is healthy and necessary and does not represent a personal attack on their authority. This isn’t to say they shouldn’t be the final authority on decisions, only that they must allow input from others and not be surprised or upset when their ideas are tweaked or replaced for something better.

2. My Way or the Highway - A demand for unquestioned obedience and “my way or the highway” attitude will also squash kaizen, producing a reluctance to bring forth a new ideas out of fear of reprisal. A dictatorship may work in organizations with a handful of people, but it is impossible for one person to possess all the knowledge necessary to run a complex system. It is the front-line workers that will have the best view of what needs to be changed and their voices must be heard for kaizen to happen.

3. Fat on Resources - This may seem counterintuitive, but often times it is the overabundance of resources that keeps an organization from recognizing the need for improvement. If you have too many resources then waste is ignored and issues are solved by more money, more committees and more positions rather than solving the underlying problem.

After WWII, much of Japan’s economy was destroyed and Toyota faced the hard decisions that come with many problems and few resources. They couldn’t afford any waste so they had to invent a new production system that would later be known as “Just In Time.” Lack of resources forced Toyota to innovate. *Side note: Marc Andreesen has some great points regarding raising too much money as a startup here.

4. Unmotivated or Ill-equipped employees - One thing that interested me about Toyota is their hiring process. While many companies approach filling assembly line jobs as simply a numbers game Toyota seeks out highly talented and motivated employees to fill even the most basic of positions. They understand that people are more important than machines and need incentives to keep from slipping into the “lifer” mentality, as my friend Akshay put to well. By hiring quality people and constantly providing them with training and education opportunities they also ensure that kaizen will be skillfully applied by their front-line employees.

5. Promotion by Numbers - If your promotion emphasizes toeing the line more than it does improving the organization, kaizen will be severely restricted. In order for a company to continually adapt it must reward the mavericks, the innovative thinkers who question the norm and create new ways of doing things. These people may not always fit the polished image that many organizations desire in their upper echelons, but if these people are marginalized, rather than promoted, a dangerous precedent will be set that going with the flow pays more than trying to make a change.

Resources:

Kaizen - Wikipedia
“Toyota ‘world’s largest carmaker’” - BBC News
“The Toyota Way” by Jeffrey Liker

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A couple days ago I began reading, “Boyd: The Fighter Pilot Who Changed the Art of War” by Robert Coram, the biography of Col John Boyd, one of the most controversial figures in Air Force history. Boyd is most famous for his Energy-Maneuverability Theory a huge breakthrough in fighter tactics and design, the OODA Loop and several other contributions to aviation and military theory and tactics.

Much of the book displays the constant fight between the mad warrior-scientist Boyd and the toe-the-line military establishment at the time, consisting of generals with little interest in change or original thought. Boyd was constantly being cornered by the soul-crushing monster of a bureaucracy at the Pentagon, spending more time convincing the leadership to challenge long-held assumptions than actually working on his theories.

While reading about the struggle of implementing change in a large bureaucracy, the following exchange between a Colonel and a newly appointed Secretary of Defense caught my attention. Secretary Schlesinger was looking for some wisdom on leaving a legacy and Colonel Hallock, a highly respected combat hero offered the following:

You must understand that if you want to leave a legacy it is vital for you to make a quick decision about what you want that legacy to be. If you don’t make a quick decision, you will have no legacy. Because after several months you become so caught up in the business of the Pentagon, so enmeshed with the generals, so overwhelmed with the scope and enormity of the job that it will be too late. Pick a few projects and put the full weight of your office behind them. Guide the projects. Nurture them. Know from the very beginning that they will be your legacy. Force them through the bureaucracy (Coram 279).

I wonder how many Fortune 500 CEO’s could have been saved from incredible failures if they’d had their own Colonel Hallock’s to keep them on track? The fact is large, established organizations are incredibly difficult, if not impossible to significantly change.

It is the desire of most leaders to jump into their role and start a revolution on day one, throwing out the old and bringing in the new…in reality, this very rarely happens. A leader would do much better to focus on two or three key things to change and throw their whole weight and energy behind those…this is the path to truly impacting an organization.

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“Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.”— Jack Welch

The term “organic” is thrown around quite regularly these days, mainly in regard to food, but driving to dinner last night my wife and I discussed the term in relation to leadership. While organizations spend billions of dollars each year trying to hire the best leaders, there will always be some that fail and other that succeed. What separates the two types of leaders is their ability to become organic to their employees or subordinates. But what does organic mean in terms of leadership?

Organic Leadership - natural, motivating, compelling, effortless, inspiring hard work, creativity and innovation, fun

Non-Organic Leadership - unnatural, forced, coercive, minimal effort from subordinates, conformity, mechanical

An organic leader is one who we naturally want to follow, not because we’ll get fired if we don’t (though we may), but because something inside of us believes that they are adding value to our lives, businesses, and organizations.

Yet, while it may “feel” effortless, organic leadership is quite intentional. Organic leaders completely blow their non-organic counterparts away when it comes to one area: their ability to motivate and inspire people by meeting their higher needs.

A quick history. In 1943, Abraham Maslow published a landmark study on human motivation in relation to a hierarchy of needs. His study was unique because his subjects were successful, creative people, not the usual sick and disturbed crowd. He found that humans have needs which can be placed in two groups, basic and meta(growth), the higher depending on the fulfillment of the lower.

photo credit: savethedave

Basic or Deficiency Needs -

Physiological - food, water, sleep, sex, breathing

Safety - free from danger, security both physically and financially, clothing and shelter

Love/Belonging - social relationships, friendships, family, intimacy, need to be accepted

Esteem - respect from others, self-esteem, recognition, feeling valued and adequate

Meta or Growth Needs -

Cognitive - learn, explore, make sense of the universe, discover new things

Aesthetic - beautiful imagery, order, perspective

Self-Actualization - understanding yourself, knowing who you are and where you are going, realizing your full potential

Non-organic leaders meet only the first four basic needs, sometimes even less. Organic leaders meet these lower needs, but also have the ability to meet people’s higher needs: cognitive, aesthetic and self-actualization.

Think of the leaders that have inspired you. Chances are they excited you on a cognitive level by helping increase your knowledge and understanding. On an aesthetic level they were able to inspire you through imagery and unique perspective. And in all of this they allowed you to reach your full potential.

“Most innovative,” “Inspiring,” “Purpose-driven,” these are the words reserved for organic leaders, not for leaders who simply provided a safe work environment and steady paycheck, but for those who make it all seem so natural, those who understand the hierarchy of needs.

What have leaders done to inspire you? Do you agree with Maslow’s hierarchy? Why or why not? Let the discussion begin!

As Starbucks launches its first-ever tv ad campaign, same-store sales growth is slowing and so is the stock price (down over 32% this year), raising the question of whether the titan of coffee is reaching its saturation point. With a goal of launching over 40,000 stores worldwide, CEO Howard Schultz expressed concern in an internal memo last spring that the rapid growth of the company (currently over 13,000 stores worldwide) has led to “the watering down of the Starbucks experience” for customers.

Anyone that knows me, knows I have become an avid fan of Starbucks over the past few years. I used to mock Starbucks junkies, but after discovering the breve mocha my attitude changed as quick as Barry Bonds’ bench press. One thing I love about Starbucks is that it is not just about the coffee, its about a culture and consistent experience. I admire their business model and ability to create a brand that inspires incredible loyalty from both customers and employees. No matter where I am in the world when I step inside a Starbucks I feel at home, my wife and I call Starbucks a faithful friend.

Today’s turmoil within Starbucks highlights an issue that all successful businesses must face as they grow, over-saturation. How much is too much growth? At what point does a company lose its soul and how can a company balance consistency in customer experience with aggressive growth. Even though the critics are in full force right now in regards to the demise of Starbucks I am confident that they will adapt and continue their success for three reasons:

1) Details - “Retail is detail.” - Howard Schultz
Starbucks has taken Malcom Gladwell’s advice and embraced the idea that, “little things can make a big difference.” Walking into your local Starbucks is a lesson in product placement, design and attention to detail. Everything from the napkins to the furniture to the music selection and volume is intentional. Starbucks understands, better than almost anyone, that the smallest details matter in creating the right customer experience. This attitude is widespread throughout the company and is a pillar that Starbucks was built upon. As long as this doesn’t change there is no reason why their company cannot continue to expand successfully.

2) Relaxed Affluence
One of the best-worded phrases I have heard to describe the image of Starbucks actually came from a management textbook, Strategic Management: Competitiveness and Globalization, I used in college which described the progress of Starbucks in China. “Although China is a nation of tea drinkers who generally don’t care for coffee, Starbucks is counting on its image of relaxed affluence to attract the Chinese. ” After returning from a trip to China, my wife’s best friend Sarabeth (worked at Starbucks as a barista) told us how powerful the Starbucks image had become in the land of tea drinkers. Chinese would keep their Starbucks cups, fill them with water and tote them around as a status symbol to let their peers see that they had reached the socioeconomic level required to purchase this luxury item. Starbucks is a symbol of the ever-growing Bobo (bourgeois bohemian) class, coined by David Brooks, found grazing for the past decade or so in America at places like Anthropologie, Restoration Hardware, etc. The booming Chinese middle-class is birthing its own Asian Bobos…Starbucks understands this and will, therefore, continue their success in Asia.

3) Baristas
“Sometimes you want to go, where everybody knows your name, and they’re always glad you came.” - Cheers Theme Song. Every company talks about customer service, very few really know how to put words into action. The front-line workers of the Starbucks corporation are their baristas, the people who actually make and serve the coffee. They make Starbucks what it is. They intentionally memorize the names and drinks of customers to create an inviting atmosphere. I have never met a disgruntled barista. This isn’t to say that they don’t exist, but I have talked with several people who have worked for Starbucks and never heard anything, but pride at how the company served them as employees. Treating your employees well is good business because happy employees are more willing to go the extra mile for the customer and company alike. Starbucks gets this and this is the third reason they will continue to prosper.