Tenacity Podcast

Lead, leader, leadership.  Do these words really mean anything anymore – particularly in the way that they are used when companies and organizations go about promoting themselves?  Look on the website of virtually any company or enterprise you can think of and one or all of these terms will almost always be used as an adjective to describe themselves.  Kind of all gets lost in the translation and ignored in what becomes little more than white noise.

Are you over-investing (in acquiring new clients)? Probably.  At least if you fit the pattern of most service management companies we encounter.  The notion that growth comes from the next new client you sell is fallacious, that is, if your client retention house is not yet in order.

Most firms go to market focused on two primary pillars: client satisfaction and selling new business. Legions of literature and faddish management paradigms have emerged to guide companies in pursuit of these two goals. And, they’re important. It’s just that they’re not sufficient to differentiate a service-based company from its competitors in a manner that generates eye-opening profit improvement and category leadership.

I miss Detective Sargent Joe Friday and the show, "Dragnet." It harken back to a simpler time of moral clarity when truth wasn't quite so relative.

The legend is that Dr. Albert Einstein, while at Princeton in the early 1950's, was asked by a student, "Professor, what is the most powerful force in the universe?" He is reputed to have answered, "compound interest."

We have to give David Letterman the credit for inventing, or at least popularizing, the “Top 10” idea. In many endeavors, it really is a sound discipline to thoughtfully list out and prioritize the reasons that you may want to do something – particularly if what you are considering portends great impact or requires a high investment.

Do you remember back to the 80’s and the corporate raiders? The Michael Douglas portrayal of Gordon Gekko, made famous in the 1988 Oliver Stone movie “Wall Street”, was symbolic of the real life “Barbarians at the Gate”, describing people like Henry Kravitz, Carl Icahn, Michael Milken, T. Boone Pickens, etc. They used a lot of other people’s money (hence the “leveraged” in the term LBO) to acquire companies – many of which were mismanaged, bloated, vulnerable, undervalued or all of the above. Milken, in particular, created mountains of capital available for investment that allowed for new frontiers of success and innovation.

So back to last week’s podcast – yours truly is on the hook for roughly triple my net worth as a participant (twice-removed) in a management buyout – having outbid the modern day iterations of Gordon Gekko to make the deal. Financial (not to mention personal) Armageddon is feeling like a real possibility here.

YES, IT IS! You don’t think so? Picture yourself at an operating forecast meeting. You’re seated around a conference table. There are six of you, including the boss. She has just put that very question on the table for discussion – “Do you think that it is possible to retain 100% of our clients this year?” Awkward silence. “Do you think we should plan for attrition?” More silence.

As we prepare to engage in the battle for client retention, client satisfaction is a really big bullet. I’d sure want to have it in my arsenal as we take on the challenge of retaining clients. The problem is, that client satisfaction in and of itself, is not enough to guarantee success. At worst, overreliance on a client satisfaction metric or annual survey can be down right dangerous. Here’s a quick story: