I
recently attended a breakfast where the CEO of one of Australia’s ASX Top 10 companies
was speaking. At the end of his delivery, he opened up the floor to questions.
After a range of questions specific to his industry, a question came from one
clever observer who had been keeping an eye on the share price of this company.
He wanted to know whether this particular CEO put the most focus on shareholders
or staff or clients.
It
was a great question.
Now
given his position and the fact that a mere comment from a public company CEO
can wipe millions off the market cap (look up Gerald Ratner who lost £500
million overnight for his comment that earrings from his chain of stores were
cheaper than an M&S prawn sandwich but probably wouldn’t last as long) he
had to be very careful with his answer. He gave a waffling answer that had lots
of words but didn’t really say anything and kept the share price intact.
I
have no such responsibilities though so I thought that today I would tackle
this question. Which should you focus on more in your business? Your clients or
your staff or your shareholders (or owner/s) or the products you are selling?
Let
me pitch the argument for staff.
I
often say that in sales he with the best knowledge wins. To take it a step
further, he with the best staff wins. If you have staff that have intimate
knowledge of your products and can deliver exceptional service to your clients,
then surely the individuals you have working in your organisation are more
important than the other items I have mentioned. Policies decided by owners
smoking cigars in ivory towers mean nothing if there are not exceptional foot
soldiers to deliver on said policies. Clients don’t interact with policies – clients
interact with your staff and ultimately people buy from people. It looks like
an open and shut case for the staff in an organisation being the most important
facet and everything else will fall into line.
Hold
the bus.
How
would your staff perform if the product you had to sell was over-priced and
inferior to the opposition products? You have great staff with great knowledge
and they are delivering exceptional service – but the widgets you are supplying
are terrible and everyone knows the price is way too high. Great staff can only
go so far. They can’t make clients buy rubbish – and if they were delivering
fantastic customer service then they would find it hard to recommend inferior
products. Conversely, think of Seinfeld episode 116, ‘The Soup Nazi’. Jerry
says “the guy who runs the place is a little temperamental, especially about
the ordering procedure” and Elaine says that she has “never been so insulted in
my entire life” and “there’s something really wrong with this man” but, because
his soup is so good that it can’t be eaten standing up because your knees will
buckle, customers put up with the eccentric and rude nature of the owner and
continue to buy his soup. I know it is only a TV show but I am sure you would
know of examples of great products where, at best, you tolerate the service.
Based
on this, it would appear that the product is king.
As
much as it now appears that it is a lay down misere, for the sake of
completeness, we really should explore a business that has a focus on
delivering profits for shareholders and owners. We often read about some great
businesses across the world and we marvel at the wonderful products they are
delivering. We acknowledge the contribution made by business leaders. The Bill
and Melinda Gates Foundation has donated US$3.5 billion since 2000 to eradicate
the world from polio and, in conjunction with Rotary, the world may be polio
free by 2018 with only 19 new cases last year. Regardless of how good your
products are and how great your staff are, if the business is not making money
for its owners or not delivering dividends and growth to the shareholders, then
the business will have a relatively short life. Some of the best ideas went
nowhere because the business model didn’t make money. The profits were simply
not there. Profits allow you to invest in R&D and make great products and
hire great staff. It also allows the business to continue to operate and not
close the doors. That seems an important aspect in a great business.
Maybe
a focus on delivering profits to shareholders is the most important aspect
after all?
Lastly,
let me explore the case of a business that puts clients above all else.
If
you don’t have clients, you don’t have shareholders or business owners. If you
don’t have clients, you don’t need any products to sell to them. If you don’t
have clients, you don’t need any staff to service those non-existent clients.
If
you don’t have clients, you don’t have a business.
It
seems to me that, while every aspect of a business is incredibly important and
there is a symbiotic relationship amongst all components listed so far, your
clients are king. If your number one focus is to deliver great solutions for
your clients and put them at the centre of your universe, the profits will flow
and the best staff will want to work for you and, by the very nature of
providing the best solutions, you will source the best products. As much as a
non-controversial pluck splinters from my backside answer would be that all
parts are equally important, my opinion is that your business cannot survive
without clients. Do everything you can to attract and retain those clients and
provide solutions. It has been said that money is something you make while
providing solutions for clients but I go a step further. A business is
something that runs while you are providing solutions for clients.
The
real downside is that you will have to trash those posters that proudly exclaim
how great the job is – except for those damn customers!
Mathew Dickerson