"We've Got the Hamburgers"

Last week I had dinner with a few executives of a multinational firm. One of them, a sales manager in the company’s Europe division, told us a great story.

Apparently, the service in some McDonald’s fast-food restaurants in one Eastern European country was so bad (surly, insensitive, rude) that American managers were called in to try to explain the value of customer service to the local franchisees and vendors. Their response to the Americans’ message? “Why should we be nice to them (the customers)? We’ve got the hamburgers they want. They ought to be nice to us!”

Well, that got a good chuckle at my dinner party. But that also got me thinking. As you and I, real customers, endure regular phone hell, delays, incompetence, and unresponsiveness from “enlightened” American firms right here in the U.S., I wonder: Do these firms also believe that they’ve got the hamburgers and we poor slob customers should be grateful?

They’d never say so, of course. In fact, their mission statements and public relations pieces no doubt emphasize their commitment and love for the customer. Very nice. But that same American customer who’s supposedly loved regularly slogs through hurdles that those Eastern European managers would certainly understand, and appreciate.

I think every executive, particularly those ensconced in corporate headquarters, ought to spend regular phone time addressing incoming customer complaints and queries. They ought to spend time on the front lines interacting with customers. They ought to regularly pretend to be an anonymous customer: Call the 800 number for help. Try to get some timely information via phone or mail. Go to a facility that customers frequent, and go with a “problem” that needs attention. You get the idea.

If more executives did that, all the “customer caring” that is espoused in training and marketing materials might become more of a reality, and the “we’ve got the hamburgers” effect might become a tale of the past.

Ayn Rand on Boards of Directors

Ayn Rand has written some fascinating books—Atlas Shrugged and The Fountainhead are two of my favorites. I was recently leafing through an old copy of The Fountainhead and came across a wonderful little passage on boards of directors. I had always thought that the roots of lousy corporate governance in so many companies lay with things like the sheer incompetence of many board members, or their conflict of interest with their compensation package or with the CEO who appointed them, or with their lack of spine and integrity. But Ayn Rand pointed me to another possible factor: a group dynamic that yields blandness and turgidity. As she points out, this group dynamic also explains the frequent ineffectualness of committees.

Let’s set the stage. We’re in the 1930’s, in New York City. Howard Roark, the young brilliant, iconoclastic architect is approached by a businessman named Kent Lansing. Lansing is a member of the board of directors of a corporation which is planning to erect a luxurious hotel in Manhattan. The board has not yet decided on an architect, but Lansing wants the commission to go to Roark.

Here’s the conversation that follows.

“I won’t try to tell you how much I’d like to do it,” Roark said to him at the end of their first interview. “But there’s not a chance of my getting it. I can get along with people—when they’re alone. I can do nothing with them in groups. No board has ever hired me—and I don’t think one ever will.”

Kent Lansing smiled. “Have you ever known a board to do anything?”

“What do you mean?”

“Just that: have you ever known a board to do anything at all?”

“Well, they seem to exist and function.”

“Do they? You know, there was a time when everyone thought it self-evident that the earth was flat. It would be entertaining to speculate upon the nature and causes of humanity’s illusions. I’ll write a book about it some day. It won’t be popular. I’ll have a chapter on boards of directors. You see, they don’t exist.”

“I’d like to believe you, but what’s the gag?”

“…All I mean is that a board of directors is one or two ambitious men—and a lot of ballast. I mean that groups of men are vacuums. Great big empty nothings. They say we can’t visualize a total nothing. Hell, sit at any committee meeting. The point is only who chooses to fill that nothing. It’s a tough battle. The toughest. It’s simple enough to fight any enemy, so long as he’s there to be fought. But when he isn’t……”

Postscript: Speaking of those tough battles, I am reminded of Peter Drucker’s conclusion that the only times he had seen something important come out of organizations is when that something had been carried out by “monomaniacs with a mission.”

Post-postscript: Kent Lansing fought the battle against the ennui, inconclusiveness and petty personal politics of his fellow board members, reassuring Roark with “Don’t worry. They’re all against me. But I have one advantage: they don’t know what they want. I do.” And two months later, Roark signed a contract to design the hotel.

Four Barriers to Your Next Growth Spurt

I was recently working with a client company which is getting ready for its next big growth spurt. Everything’s in place: cool new product, good people, a clear strategic plan, and a solid financial structure. We should all have such problems!

But there are always problems, aren’t there? In fact, the senior managers and I came up with four potential pitfalls to their growth spurt, even if everything else seems to be peachy keen. Seems to me that any company ought to seriously consider these potential pitfalls, so here they are:

1. Pitfall: Leaders and employees pay more attention to “the organization” than “the business.” In other words, they focus primarily on internal issues (processes, job descriptions, turf, politics) and wind up spending less time on external issues like customers, new technologies, competitors, market trends, and fleeting opportunities.
Solution: Pay attention to the internal stuff, but concentrate on external issues that lead to sustained growth.

2. Pitfall: Strategy becomes equivalent to meeting targets. Targets are the goals, the basis of the final scorecard. They say nothing about the kinds of decisions and behaviors that leaders must do to get there. When the ends are clear but the means are “anything goes” or “the ends justify the means”, then there’s an open invitation to confusion, inefficiencies and corruption.
Solution: Develop a coherent strategy and values set that clearly define the broad parameters of what the firm will do, and how, to reach those targets.

3. Pitfall: Strategy becomes “even more” of the same. It’s seductive to assume that growth and competitive success will occur if people do more/better of what they’ve always done, or what they’re familiar with. Given the perpetual dislocations in the external marketplace, this assumption is usually wrong.
Solution: Continually challenge sacred cows, innovate and collaborate to help the organization break new ground, become unique, and perpetually evolve in a way that truly matters to the customer.

4. Pitfall: Execution is a low-integrity, high-lip service affair. When the leaders don’t personally get involved in execution, when the talk isn’t walked by everyone, the execution—and hence the strategy itself—becomes flabby, unclear, inconsistent, inefficient, and idiosyncratic rather than institutional.
Solution: Make execution a real priority for everyone: insist on discipline, transparency, and accountability across the board.

Some Practical Questions About Immigration

First, let’s establish my “street cred”. I am an immigrant. I came to the U.S. from Mexico when I was 6 years old because my father and mother found jobs here. I started first grade without knowing a word of English. To this day, going to Latin America is one of my favorite professional and personal pastimes. I’m pushing my kids to learn
Spanish, because I think everyone that lives in the U.S. would be wise to do so.

Having said that, I can also confess that I’m troubled by the recent “pro-immigration” demonstrations and boycotts, and the open-the-borders mentality among libertarians like those who write the Wall St. Journal op-ed page. Certainly I understand the rationales for the fears, frustrations and hopes that many undocumented immigrants harbor. And as a proponent of free-markets, I sympathize with the economic theories supporting the unfettered, boundariless global movement of labor.

And yet, I’m disturbed because I haven’t received adequate answers to a few practical questions. Like:

• Is a person’s willingness to sneak across a border and work hard sufficient grounds for enjoying permanent status in the U.S. ? I’ve traveled extensively throughout the world and wherever I go, I see people who desperately want to emigrate here. I’ll bet that, conservatively speaking, among the 6.5 billion or so people who live on earth, that at least 500 million of them would love to come to the U.S. and would be willing to work very hard for low wages upon entry. Should we open the borders and let half a billion people in? Hello??!?

• I can certainly empathize with businesses’ desires for cheap labor. But to paraphrase Thomas Sowell of the Hoover Institution, aren’t we simply subsidizing many businesses that would otherwise raise wages, or innovatively automate tasks, or offshore tasks, or get out of businesses that no longer make economic sense? A steady run of cheap labor—no questions asked—may be expedient for an individual firm in the short run, but consider this: in the long run, how efficient or innovative are domestic markets that are artificially propped up?

• The empirical data are pretty clear. It’s one thing to open the door to millions of new immigrants who have high-end professional skills. It’s quite another to open the door to millions of new immigrants who have, at very best, a high school education. The first scenario is a turbo-boost to competitive success in the global knowledge economy (and if anything, we need to make it even easier for folks like these to enter). The second scenario is a temporary salve for many vendors and consumers, and, I would suggest, a potentially adverse source of unintended social, political, and economic consequences nationwide.

• The first three bullets are open to debate, but this last one I hope is not. It’s the most important one. The bedrock of any effective democracy and market system is a rule of law. When laws are flagrantly skirted, and when those who skirt them insist that the laws are meaningless, and when people, in effect, get to choose which laws are “worthy” of being obeyed, I worry about the future of this country. Please spare me the flowery words about “we’re all immigrants.” Once and for all, the issue here is not immigration, but legal vs. illegal immigration. Like many recent immigrants and like your descendants, my family came here legally. What do we tell those people who are going through the laborious process of getting a visa, a green card, or—if they’re already here legally—their citizenship papers? Do we tell them they’re fools? What sort of message are we giving people in other countries who are planning to go through legal channels to be part of this country? What message do we send about U.S. law in general? I’m sorry, this issue can’t be prettied up or shoved under a rug, regardless of whether jobs presumably exist for people who are willing, however nobly, to risk even death to circumvent police and borders to get at them.

I’m no saint. Over the years, I know I’ve hired laborers who’ve turned out to be illegal, and because I speak Spanish, I’ve become friendly with some of them. I’m no genius, either. I don’t have the policy answers for this thorny issue. The idea of rounding up 12 million illegals and shipping them south is absolutely absurd. But the idea of rewarding lawbreaking with blanket amnesty is equally absurd, as is the accusation that controlling our border is somehow either racist or totalitarian. We need to have an honest dialogue on these matters, including those four bullets above, in order to come up with a just, viable, and enforceable immigration policy . Unfortunately, I’ve not been overly impressed with many of our legislators, who are either too spineless to confront the above four issues squarely, or so unprincipled that they are willing to pander to any group in order to get re-elected. My last thought: Vote them out. This immigration issue is way too important to tolerate cowardice or opportunism.