May 10, 2008
Dear Barack,
It isn’t easy being a transformational leader, is it? Congratulations on what looks to be a victory for the Democratic nomination, but let’s look at the last four months (which must have seemed like four years) and see what lessons we have learned about transformational leadership.
1. First, we need to give some credit to James MacGregor Burns who long ago wrote the book Leadership and described two kinds of leaders: “transactional” and “transforming.” He wrote, “The relations of most leaders and followers are transactional - leaders approach followers with an eye to exchanging one thing for another…Transforming leadership, while more complex, is more potent. The transforming leader recognizes an existing need or demand of a potential follower. But, beyond that, the transforming leader looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower. The result of transforming leadership is a relationship of mutual stimulation and elevation that converts followers into leaders and may convert leaders into moral agents.” It’s almost like a transactional leader is leading from the bottom of the pyramid while the transformational leader (I prefer “transformational” to “transforming”) is leading from the top. No doubt, while most political pundits haven’t read my book PEAK, I do believe they would acknowledge that your chief political adversary, Hillary Clinton, has run her campaign as a transactional leader with her very tangible, policy-driven, and practical approach to solving problems. In fact, one of the chief knocks on Hillary has been her inability to inspire or help people see the bigger picture and, at times, her tendency to focus on the fear-driven survival needs of the electorate.
2. Many of the things that Burns has written apply to your campaign: the “complex” but “potent” message, the fact that you recognized the “higher needs” in your followers - the desire for a new kind of politics that stands above the past political pollution, and the “Yes, we can” message that “converts follower into leaders” and has helped convert you into a “moral agent.” You are a different kind of leader: one who asks us to “be all we can be” if I can be so bold as to steal a phrase from Maslow and the US Army. JFK used to talk about a rising tide lifting all boats and that’s the kind of feeling many Americans experience when they hear you speak, read your books, or really take a moment to understand your truly American Dream of a life story. We are living in a time when my fellow countrymen and women are looking for the kind of change that a transformational leader can offer. It’s a new century. It’s a delicate and small world. We don’t fit into the demographic boxes that made sense in 1958. Fifty years later, America is waking up to the fact that other countries around the world are passing us by as we live in splendid isolation on this big island we call the US of A. Your diverse history from Kenya to Indonesia, from Kansas to Hawaii speaks to the future, not the past, and the only way you will win the election in November is if you help America see the necessity of transforming ourselves to succeed in the future as opposed to just wallow in our glorification of the past.
3. You will be painted as the “American Dreamer,” a nice enough fellow but someone different enough to not understand the issues of the common man. You will be seen as a Harvard-educated elitist who can give a great speech, but who doesn’t know how to get his hands dirty to make things work. You will be vilified as a “snake oil salesman” with your slick and polished manner and you will be cast as the “other,” not really one of us. When they hit you with this kind of rhetoric, just remember two things: remind them that our greatest leaders were different and that the world isn’t what it used to be. Lincoln, that greatest of Presidents from your state of Illinois, was different. He wasn’t a transactional leader making deals in backrooms. He helped America see that we were on a path toward ruin if we didn’t unify. Kennedy was different. He was elected President when Catholics were considered to be lower class and not fit to be the supreme leaders of the land. He reminded us to reach for greater things whether it’s putting a man on the moon or having the courage to stand up to the Soviets. Reagan was different. He was an actor–and a not too impressive one. But, whether you liked his politics or not, his transformational message took us from the ugly 70’s to the confident 80’s with his “morning in America” perspective and his “tear down this wall” speeches to the Soviets. Our best Presidents have been transformational in their ability to unite us and help us individually and as a country “be all that we can be.” You are also the perfect messenger of the message: the world has changed and we need to change with it. Our American empire will crumble like the Romans if we don’t adapt and see that our leadership needs to be future-oriented and visionary as opposed to being wedded to the past. Be bold and transformative with your policy proposals whether it be in the area of energy independence, educational reform, or helping us to regain America’s status as a trusted and respected ally to our foreign friends around the world.
4. Whether in business or politics, transformational leaders need to surround themselves with practical, solutions-driven operators who know how to “make the trains run on time.” Choose a Vice President who can be a Chief Operating Officer, someone who can take your vision and make it actionable. To show that you truly mean to unify the country, choose a few members of your cabinet that are independent-minded Republicans who can give you the kind of 360 degree perspective that our current President has so sorely been lacking. Be specific about your policy goals and deadlines as the greatest risk you have is being perceived as the ethereal monk on the mountain who gets high breathing the air but hasn’t provided for the basic survival needs of himself and his people. Find a few Presidential potholes to fix. As a transformational leader, just remember that your greatest gift is in helping us see the sense of “oneness” that we have at our core and that you so eloquently speak of and exhibit on the campaign trail. Our greatest leaders help us see what we couldn’t envision on our own.
Good luck to you. You have a formidable and admirable opponent in John McCain who shares many of your qualities.
Wishing you all the best,
Chip Conley
May 11th, 2008
I’m not one to hang out at séances, but I do need to remind the world that today, April Fool’s Day, Dr. Abraham Maslow would have been 100 years old. Not many people can attest to having an IQ of nearly 200 (those who do attest to this should save the info for their Mensa meetings), serving as the President of the American Psychological Association, and creating a self-affirming philosophy of life that the US Army translated into an effective advertising campaign (“be all you can be”). Abe reminded us of the power of pyramids and the purity of potential.
When in doubt, create a gratitude list, right?! If Abe had never joined us on this earth, we might never have:
- understood that more can be learned from the “best practices” of human beings than the “worst practices” (his psychologist brethren tended to focus on the latter)
- fully appreciated that self-actualization is a state in which we ironically transcend ourselves and connect with the oneness of something bigger than us
- realized that “being out of our minds” can actually be a good thing from a psychological perspective
- understood how important it was to find the intangible, “deep satisfiers” in life as opposed to the tangible base needs (think MasterCard’s Priceless commercial)
- been able to re-interpret “being-ness” for the “busy-ness” world as I’ve tried to do in my book PEAK.
The metaphor that I imagine when I think of Abe and self-actualization is the idea of a runner. Self-actualization isn’t easy. It’s not something that just miraculously appears and gives you a magic carpet ride. It is the difference between wearing a pair of ill-fitting running shoes that diminishes your ability to run as fast and as far as possible versus wearing just the right shoes. Self-actualization does mean you sweat and labor, but you do it in a manner that taps into your endorphins rather than sapping your energy. Living your calling produces a high that allows you to have a high threshold for pain as well as a high capacity for love. Happy Birthday, Dear Dr. Maslow, and thank you for introducing the world to the powerful idea of human potential.
April 1st, 2008
We haven’t seen such a mess on Wall Street since my grandfather was a teenager. Fortunately for these titans of capitalism, our activist Federal Reserve has stepped in to – at least temporarily – stem the tide of a bank run that threatened to collapse more than one investment bank. Bear Stearns didn’t dodge the bullet and ended up trading for little more than 2% of what it was worth a year ago. Cynics are suggesting that the whole investment banking culture and the very nature of capitalism is at fault here, but I beg to differ. I believe Dr. Abraham Maslow and his iconic and idealistic human hierarchy of needs can shed some light on why some investment banks are peak performers and others are now virtually out of business.
As I outlined in my book, PEAK, there are three essential business themes that come from my interpretation of Maslow’s humanistic hierarchy: SURVIVE at the base of the pyramid, SUCCEED in the middle of the pyramid, and TRANSFORM at the peak of the pyramid. This “Transformation Pyramid” helps explain why some companies like Toyota with its eco-hybrids or Apple with its revolutionary iPods transform their industries while others like Sears or General Motors languish barely in a survival state. Investment banking would seem to be an industry that is deeply divorced from the feel-good humanism espoused by Maslow. But, a PEAK-focused comparison of the industry leader, Goldman Sachs, with the virtually bankrupt, Bear Stearns, proves that this legendary approach to human behavior can even be predictive of which investment banks flourish and which fail.
Just a week before the Fed and JPMorgan shocked the market by taking over a crippled Bear Stearns, Goldman Sachs announced to the world that they were making a $100 million donation to give at least 10,000 women a business education and, more broadly, to develop and enhance business education programs in the developing world. Amidst all the wealth on Wall Street, no firm has generated more charitable foundations than Goldman Sachs. This gift – which was the largest U.S. corporate donation since 2000 – is a reflection of why Goldman Sachs was recently profiled by Fortune as the #1 Admired Company in the Securities industry. Furthermore, the company is consistently listed on the “100 Best Companies to Work For” list and was the first investment bank to adopt an environmental policy back in 2005.
No doubt, investment bankers are motivated by money. But, unlike most of their brethren, Goldman Sachs has created a culture that has transcended that bottom of the pyramid goal in life. The company has nine key leadership principles (not one of which uses the word “money”) including “act with a profound sense of integrity and fairness” and “promote meritocracy by welcoming and leveraging differences.” So, those are just words, right? No, Goldman has used these principles to create a transformative culture that has allowed the company to outshine its industry the way few companies do. Stephen Friedman, former co-chairman of the firm and now a director, says, “There is no mystery, no secret handshake. We did a lot of work to build a culture in the 1980s, and now people are playing on the balls of their feet.”
This culture – while competitive and money-driven like the rest of Wall Street – has focused on creating a collegial environment, serving their clients with an eye to long-term relationships, and making a difference in the world. The company creed has not purely been about making money. Goldman has become a breeding ground for successful leaders from the current US Treasury Secretary Henry Paulson to the White House Chief of Staff Joshua Bolten to the head of the World Bank Robert Zoellick to the Governor of New Jersey Jon Corzine. Goldman isn’t just transforming the industry, they are creating a culture that breeds leaders who want to change the world.
And, in a “karmic capitalist” kind of way, this transformative approach to investment banking has led Goldman to get it right in the recent credit meltdown when the rest of Wall Street got it desperately wrong. Goldman Sachs just experienced its best year ever. While their competitors are awash in losses, Goldman’s revenues grew 22% and they had record profits. Their most recent quarterly earnings represented the 11th quarter in a row that Goldman exceeded analysts’ estimates of how successful they would be. Like Southwest Airlines, Harley Davidson, and Whole Foods Market, Goldman Sachs has proven that they can be the leader of their industry by transcending the base survival needs that most companies never get beyond.
Bear Stearns is a company that never transcended the base of the pyramid. Even on ultra-competitive Wall Street, Bear Stearns was an outlier with sharper elbows than most. Money wasn’t just important. It virtually represented a religion. Bear Stearns’ legendary Chairman Ace Greenberg said they were looking for people with PSD degrees – poor, smart, with a deep desire to become rich. William Smith, a former Bear Stearns employee, in an NPR interview, recently suggested what happened to the firm was karma as it was the only Wall Street firm that didn’t assist in the 1998 bailout of Long Term Capital Management. Smith says, “Bear Stearns operates on their own…and they don’t believe in the greater good. They believe in Bear Stearns and that’s ultimately what brought them down. No one came out of the woodwork to help these guys. As a matter of fact, it was the exact opposite.” In fact, in the wake of the dot-com crash in 2000-2001 when Wall Street took a tumble, Bear Stearns was the first firm on the Street to lay off staff, ultimately giving pink slips to nearly 1,300 people.
Bear Stearns wasn’t a bad place. In fact, there was a diverse family there of misfits from all demographics, as they weren’t as WASPy as the old blue blood firms like Morgan Stanley. They were a scrappy underdog. Sure they had the occasional scandal, but possibly not any more than any other Wall Street firm. But, what was missing was a sense of firm aspiration that helped Bear Stearns execs see beyond the base goal of just making money. People are comparing the firm to Enron with their hyper-focused mercantile culture and psychologist Alden M. Cass, who counsels many Wall Street executives, says “Among employees, I am seeing a similar sense of distrust as we witnessed after Enron.” Not a surprise. These Bear Stearns employees lost their life savings over the past month and when your sense of value as a human comes down to how many zeroes you have on your personal balance sheet, it’s got to be disorienting to wake up and realize you’re broke – in more ways than one. That’s part of the reason why – to their credit - the firm has hired a set of grief counselors to help their employees get through this troubling time.
It’s hard to imagine an idealist like Maslow having a message that could resonate on Wall Street, especially during these times of fear. But, one need only look at two companies – one that aspired to longer-term, higher goals and one that got trapped in the transactional trenches – to understand that peak-performing companies are not full of robots. Investment bankers will never be confused with saints, but Goldman Sachs proves that transformative companies that seek their peak look for ways to “be all they can be” (as Maslow and the U.S. Army used to say) in a manner that creates long-term profits and sustainability.
March 30th, 2008
For those of you who’ve read PEAK, you’re familiar with the Transformation Pyramid, which slims down Maslow’s five level Hierarchy of Needs into an adaptable form with just three levels: SURVIVAL at the bottom, SUCCESS in the middle, and TRANSFORMATION at the top.
This Transformation Pyramid represents universal themes that are applicable to any organization’s relationships with their employees, customers, and investors. For example, the Sierra Club can attract meaning-seeking employees by focusing on the “transformational” peak of the employee pyramid, but if they don’t compensate these employees enough to pay their rent at home (their “survival” needs), they haven’t created a sustainable relationship.
On the other hand, most for-profit companies mistakenly think that the compensation package at the base of the employee pyramid is what creates loyalty and differentiation as an employer. They are wrong. Peak performing companies have much higher employee engagement and much lower turnover by helping their employees move their focus from money (what defines a “job”) to recognition (what defines a “career”) to meaning (what defines a “calling”).
The Transformation Pyramid is relevant to customers and investors, too, and it can be applicable to everything from how you approach your expectations of your family vacation to how you view the Presidential candidate choices. No doubt, Barack Obama is a transformational candidate (I’m a big fan), but Hillary Clinton has clearly suggested
that his intangible, self-actualizing appeal is distracting from his potential lack of “in the trenches getting it done” management capabilities. In many ways, Americans see the choice of Barack as a peak-minded leader versus Hillary as the foundational, base of the pyramid manager. When we have the choice between inspiration versus perspiration, most of us will choose the former (unless we’re living in a time that’s full of fear…a bottom of the pyramid time).
Clearly I’m a transformation nut. But, let me say that transformation doesn’t come easily. I’ve been reminded of that in my own company this past year. Joie de Vivre Hotels is growing faster than it ever has. We will be launching or re-launching (after renovation) something like 14 unique boutique hotels over the next 16 months plus approximately a dozen restaurants. That’s quite an endeavor and about triple the growth path we’ve typically had in past years. During this time, many of us in the company have noticed that we are a little more stressed and, at times, overwhelmed with the variety of choices and decisions we need to make. We’ve all felt it. Our work climate surveys suggest it’s noticeable, especially with our 80 employees in our home office (fortunately, our on-property staff scores continue to be
exceptionally high).
It was in preparation for a recent leadership class to our General Managers and Operations Managers that I came to realize we were “in the goo.” We are all familiar with the miraculous transformation of a caterpillar into a butterfly. That’s exactly where we are today. Here’s a passage from an online site that describes this transformation:
“The caterpillar knows something is going on as the transformation begins. ‘Imaginal cells,’ which are initially thought to be a virus or enemy, start to build up in the caterpillar’s body until such time that these imaginal cells overtake the caterpillar’s cells and the caterpillar creates a cocoon.
Some imaginal cells start changing into wing cells, some start changing into antenna cells, some start changing into digestive tract cells. They are no longer imaginal cells, but instead have become butterfly anatomy cells. In essence, the caterpillar disintegrates into a puddle
of ooze. If we were to open the cocoon halfway through the process, we wouldn’t find a half-caterpillar, half-butterfly type creature, but a blob of goop.”
It’s hard to describe my company as a blob of goop, but having that evolutionary reference point has helped all of us understand that our situation is temporary (if this caterpillar to butterfly transformation is too revolutionary or graphic for you, consider the tadpole to the
frog instead). We are in a cocoon and what will truly determine whether we properly exit as a beautiful, fluttering butterfly is what we do in this cocoon to use the “imaginal cells” of change in culture and processes to help us be strong enough to emerge from this transformation.
So, the next time you and your company are feeling “in the goo,” ask yourself, “Are you in the midst of a transformation? Or are you just spiraling downward in a kind of corporate quicksand?” If you’re lucky enough to be the former rather than the latter, take this opportunity in the cocoon to truly transform your organization into something exceptionally beautiful. It will be a lot of work, but it will be totally worth it!
February 26th, 2008
I became a born-again Maslow nut during the post-dot-com, post-9/11 period that we Bay Area hoteliers like to refer to as the “five-year hangover” starting in January 2001. After five years of phenomenal times for Bay Area hotels, we experienced a bubble burst heard round the world. Suddenly assets became liabilities. Someone once told me that all businesses have a start-up phase, a throw-up phase, and a grow-up phase. My goal in 2001 was to graduate to the grow-up phase as quickly as possible.
Burning the midnight oil reading Maslow and his iconic Hierarchy of Needs gave me the confidence to take a contrarian path in the hotel industry wreckage that was 2001-2005. Rather than purely living in trench warfare for half a decade, we decided to focus on the higher needs of our employees, customers, and investors. Creating peak experiences for these three constituencies helped us to create peak performance for my company. And, almost exactly seven years later, our annual revenues are triple what they were back then.
OK, how does this relate to residential real estate? I was scooping sun-dried tomatoes on my spinach salad at the new Whole Foods Market that moved into my ‘hood (thank you John Mackey!) when a business colleague came up and slapped my back. Given that I don’t have too many back-slapping friends, I immediately recognized the fraternizing embrace as a real estate developer I’ve known for years. He told me he hasn’t been sleeping well for months because all of his residential real estate developments were going “sideways.” Wasn’t that a movie a few years ago about drinking a lot of wine? Now I understand the reference. But, and this is the honest to God truth, he said he’s been reading my book PEAK and he’s now sleeping so much better. I wasn’t sure how to take this. I have a few books bedside that are my trusted version of Sominex. Fortunately, that wasn’t what he meant. He said, “Now I understand the pain and suffering you were going through a few years ago and why the Hierarchy of Needs was your savior. I’m applying your Maslow theory to my little debacle and it’s amazing how relevant it is and how easy it is to teach everyone in my company about this.”
Suddenly, I realized that what we’d experienced in hotels seven years ago was being repeated for home developers, investors, brokers, and, certainly, home owners. The bubble bites, doesn’t it!? But, my conversation with this developer was truly enlightening as it’s one more piece of evidence to suggest that this PEAK theory is relevant to all kinds of industries. Let’s first examine the problem.
The problem is the bubble has burst, which means that home buyers have moved from the fright of not buying quickly enough (for the last few years, waiting six months could cost you 10% in a price increase) to the fright of whether buying a home in this marketplace is a prudent investment. So, based upon the idea that people need their base survival needs addressed first, smart home developers are first and foremost figuring out ways to communicate the safety and intelligence of making the investment. One clever developer I know created a forty year line graph showing the ebbs and flows of Los Angeles residential real estate values and then the specifics around their neighborhood. What this graph demonstrated was the idea that values do go up and down – this isn’t the first time there’s been a marketplace devaluation. But, the neighborhood graph of values showed that this particular area had held its values historically better than the overall metro market. So, in essence, this developer was trying to allay the survival fears of the home buyer to say, “I know you have worries about home values, but this is a safer bet given that this neighborhood has performed better over time.”
But, just addressing a buyer’s survival needs isn’t enough. As my developer friend told me, “We have become much better listeners. The second level of your Customer Pyramid suggests that customers make a commitment when they have both their expectations AND their desires met. Rather than dropping our prices like all of our competition is, we’ve chosen to add value or provide upgrades to the homes that specifically address the desires of the customer. A year ago, we might have charged them an extra $10,000 for hardwood floors. Now, we provide it for free. We try to have our salespeople come up with three desires per customer that we can translate into value. We show these prospective buyers just how much they’re saving on these upgrades, but it also means we aren’t cheapening the values in the neighborhood. In fact, we’re improving the values because we’re creating better homes.”
So, I asked my colleague, “I understand how you address the two lowest levels of the Customer Pyramid – expectations and desires – but how do you address the “Unrecognized Needs” of the customer to create the self-actualized experience that is found at the peak of the pyramid?” He said he was still trying to figure that one out. Since then, I’ve given it some thought. Why not make a special offer to the prospective buyer: as icing on the cake, we will offer you $5,000 to be used in one of the three following ways: (a) we throw you the most over-the-top housewarming party, anniversary, or birthday party for you and all your friends in your home, (b) we give you a $5,000 credit at Best Buy for you to buy whatever kind of home entertainment system or technology you want, or (c) we donate $5,000 to the charity of your choice in your name. While other developers will drop prices at the drop of a hat, you can create a memory or something of real value by “investing” your $5,000 in a manner that truly makes a difference for the buyer.
If you’re in the residential real estate field or just own your home or condo, just remember Winston Churchill’s line (although Winston wasn’t particularly Maslovian): “When you’re going through hell, just keep going.” As I learned with the hotel biz, “this too shall pass.” Rather than fighting in the trenches every day and just dropping prices as your solution to get sales traction, consider how you can appeal to the higher needs of your prospective customers. I promise it will differentiate you in the marketplace. In a time when everything has become commoditized, differentiating yourself and your product is the sign of a peak performer.
January 2nd, 2008
OK, it’s that time of year when we all become transactional. We overstuff our bellies on Thanksgiving Thursday and then overextend our credit on Black Friday when America’s malls remind us that capitalism is alive and kickin’ in the good old US of A. But, what if a retailer were to take a more transformational approach to their customers during this busy time of year? Or, what if you or I were to purchase experiences rather than possessions as a way of gifting our relatives and friends?
Abraham Maslow suggested that we all aspire to self-actualization in the course of our lifetime after we’ve had our base needs met. In my book PEAK, I suggested that peak-performing companies move beyond the transactional nature of most customer relationships at the bottom of the pyramid so they can address their customer’s higher needs (which are often unrecognized or unspoken by the customer). A great company creates peak experiences for their customers in a way that almost transforms them into a self-actualized customer.
I was reading the SF Chronicle today where I saw a Business page cover story on how Apple is remaking their already-successful retail stores. The first line of the article is “Not a cash register in sight.” Ron Johnson, who runs Apple’s retail stores worldwide (and is quoted in my book), tells the reporter, “We try to pattern the feeling to a five-star hotel. It’s not about selling. It’s about creating a place where you belong.” Apple’s “Genius Bars” (friendly technical support, especially for those self-actualized Apple customers who pay $99 annually as part of the Procare program which allows them one hour a week of extra training and attention) have been expanded. It’s almost like a hotel that came to realize they were making big bucks on their lobby bar so they decided to extend the bar. Well, at Apple, they’re dispensing wisdom, not cocktails, but they’re finding this relationship-driven approach to selling computers to be highly profitable. It’s a far cry from Radio Shack.
In fact, Apple has now banished the cash registers so that their “concierges” who help customers find their products can just whip out a portable scanner on the spot in order to facilitate the payment for the goods. Notice that the transaction is the last step of the process and is completely understated. Has this worked? You bet it has. Conventional wisdom in 2001 (when AppleHi ch opened their first stores), suggested computer retailing was passe as Dell’s “Direct” approach was going to take over the world and Gateway was going out of business. Yet, Apple became the fastest retailer of any kind to ever make it to $1 billion in sales. Now, they’re up to $4.2 billion annually just in retail sales.
So, how can you apply Maslow’s Hierarchy of Needs to your shopping habits this holiday season? First of all, just remember that most of us have way more stuff than we need and we have precious little storage space to “stuff” all this additional stuff we’re going to receive these next few weeks. Take a lesson from MasterCard - who frankly would appreciate it if we all bought billions of dollars of useless crap for each other - which reminded us that what’s most important in life is what’s “Priceless.” What’s priceless in our lives isn’t the material possessions, it’s the experiences and memories we create with our loved ones. The big gift I give the 11 members of my extended family each Christmas is an annual family vacation. Last year, it was an art-themed weekend in LA. This year, we’re going (along with an additional 3 family members) to the Ahwahnee Lodge in Yosemite where we’ll have a traditional white Christmas and experience the legendary Bracebridge 17th century English yuletide ceremony (which has been celebrated annually for 80 years at the Ahwahnee and has to be booked a year in advance).
If you want to create a transformational holiday experience - as opposed to the typical transactional approach - consider the following three questions: (a) what kind of unique experience can you create that your family or friends will remember for years? (b) what kind of gift can you give that will self-actualize your gift recipient (for example, how about donating $100 to a teenager’s favorite cause?)? or (c) what’s an educational experience you can gift someone that will boost their sense of esteem and will benefit them for years to come? In sum, as the feverish shopping season kicks into gear, consider a new approach to creating a more meaningful season of giving.
November 26th, 2007
This weekend I had the opportunity to peek into the Green Festival here in San Francisco. Years ago this public tradeshow was primarily full of folks wearing tie-die. Today the crowd is as mainstream as a crowd can look in hippy-dippy San Francisco. I saw guys in suits and soccer moms with their kids in tow–all there to learn a little bit more about the burgeoning green marketplace.
Given that I’ve got Maslow’s Hierarchy of Needs on the brain (the foundation for my new book, Peak: How Great Companies Get Their Mojo from Maslow), I started wondering, “How does ‘living green’ address the higher needs of employees, customers, and investors?” Strangely enough, the more I considered it, the more I realized that the green movement is a perfect example of how any company can genuinely address the higher needs of their key constituents as it can have a transformative effect on people (the reality is that there are many companies today who are not “genuinely” or “authentically” doing this but they’re just providing “greenwash” to make themselves look environmentally responsible).
So let’s consider each of these three constituencies in relation to the key themes of the Hierarchy of Needs pyramid, which progresses from SURVIVAL needs (physiological/safety) at the bottom to SUCCESS needs (social/esteem) to TRANSFORMATION needs (self-actualization) at the top. The Employee pyramid’s progression is MONEY, RECOGNITION, and MEANING. So, do employees have their Meaning needs addressed when they work for a company that’s genuinely taking an environmentally sustainable approach to their business? Absolutely. Creating a Green Task Force at Joie de Vivre was a magnet for proactive problem solving, especially from many of our younger Gen X employees. For many of us, making a difference creates greater meaning in our lives than making a buck.
What about the Customer pyramid? The progression there is from MEETING EXPECTATIONS (survival) to MEETING DESIRES (what could be defined as “success” for a customer) to MEETING UNRECOGNIZED NEEDS (when a customer feels transformed by buying from the company). The initial purchasers of the Prius were definitely self-actualized customers who were having their unrecognized needs met. Four years ago, how many people could say they were helping the planet while buying a car? The core customer for the Prius used to be an eco-minded person who wanted to have a transformative effect based upon the car they chose to buy. What’s interesting is with time the largest market segment for the Prius has become the customer who is looking to save money due to the car’s fuel efficiency. And, the number one reason that people buy a Prius today? 57% of Prius owners say they bought the car because it “makes a statement about me” (this was just 34% nearly four years ago) while lowering emissions (which used to be a primary reason) has fallen to fifth place in the top seven reasons why people buy a Prius.
While many of us wonder whether some investors are truly human as opposed to just being Return On Investment robots, I do believe the Hierarchy of Needs has relevance here, too. The survival and success needs of investors have to do with being in TRANSACTIONAL and RELATIONSHIP ALIGNMENT with the entrepreneur or company in which they are investing. An investor who is looking to experience transformation from their investment is what I call a LEGACY INVESTOR, someone who sees that their role as an investor can make a difference in the world. When a legacy investor invests in a green company or in a company that is at least operating using environmentally sustainable principles, there’s no doubt that investor is feeling a little more self-actualized and proud of how they are making the world a better place.
In sum, companies that focus on transcending the bottom of the pyramid–the survival needs of employees, customers, and investors–are able to address the higher needs of these constituencies. We all have roles in the world of business, whether that role is being an employee or a customer or an investor. Whatever our role, most of us want to feel good about how we make a difference with the actions we take. Companies that are “living green” create inspired employees, evangelistic customers, and proud investors by giving them a sense that they are transforming the world in their own small way.
November 13th, 2007
| April 18, 2008 | to | April 20, 2008 |
CLICK HERE TO REGISTER FOR ESALEN WEEKEND.
Where: Esalen at Big Sur
Program: How Great Companies Get Their Mojo from Maslow
Presenters: Chip Conley (with Vanda Marlow)
A weekend workshop on how you and your company can use the principles of Abraham Maslow’s Hierarchy of Needs to create a more self-actualized employee, customer, and investor. Twenty years ago, Chip founded Joie de Vivre Hospitality, which has become America’s second largest boutique hotel company. During the travel downturn of 2001-2004, Chip reconnected with Maslow’s work and developed an operating business theory that suggests “peak experiences create peak performance.” Seeing that this theory paid big dividends, both financially and emotionally, within his company of 2,500 employees, Chip began to study companies like Google, Genentech, Southwest Airlines, and Whole Foods Market. He found that Maslow’s influence was profound in these peak-performing companies.
A prerequisite of this workshop is reading Chip’s book PEAK and being prepared to talk about your company—whether it’s a single proprietorship or a multinational corporation—and how it can apply the humanistic principles of the Hierarchy of Needs to its key constituents. While a good portion of the workshop will focus on applying Maslow in the workplace, the last session will be saved for the more personal side of how to use the Hierarchy of Needs in your own life.
October 25th, 2007
I was a freshly-minted adult when I graduated from Stanford Business School half a lifetime ago (23 years to be exact). Along with my classmate Seth Godin who was also a youngster when he graduated, I found all the theory that filled the biz school classrooms to be rather stale. Seth and I were so bored that we created our own independent studies course where we interviewed interesting businesspeople and asked them to share their rules for success (the result, “Business Rules of Thumb,” was the first book for us both…good luck finding a copy). We found these corporate leadership stories to be much more compelling than any decision tree or manufacturing bottleneck analysis. Two years ago, Seth even wrote a book on storytelling called “All Marketers are Liars,” in which he suggested that successful marketers don’t talk about features or benefits, they just tell great stories.
Since then, I’ve read a lot of great books on storytelling but I’ve yet to read one that so systematically and convincingly explains the steps for creating the drama and landscape for storytelling as the one I’ve just finished. Authors Richard Maxwell and Robert Dickman, who are consultants in the entertainment industry (if there ever was an industry based on spinning a tale, that’s it), have written The Elements of Persuasion which came out a few months ago. They suggest that all successful stories have five basic components: the PASSION with which the story is told, a HERO who leads us through the story and allows us to see it through his or her eyes, an ANTAGONIST or obstacle that the hero must overcome, a moment of AWARENESS that allows the hero to prevail, and the TRANSFORMATION in the hero and in the world that naturally results. Sounds a like a Hollywood hit to me. But, reading this book, I became convinced that great leaders are also able to express their reality and vision using this arc to define their story.
I was reminded of this last week while giving a presentation about my book PEAK: How Great Companies Get Their Mojo From Maslow. I was speaking to this group, not knowing that the wife of one of our employees was in the audience. For those of you who’ve read PEAK, you know this is a tale of how I launched my impractically-named company (Joie de Vivre Hotels) more than 20 years ago because of the passion I felt for the hospitality business’ approach to making customers feel good. I talked about how I was burnt out at the age of 25 having spent my first two years out of biz school getting pummeled in the rough-and-tumble world of commercial real estate development and construction. Starting Joie de Vivre (mindful of the company’s mission statement – defined by our name: “joy of life”) and growing it to be one of largest boutique hotel companies in the world was exhilarating. But, in our fifteenth year, we experienced the worst hotel downturn since World War II and Joie de Vivre was particularly exposed since all of our hotels were in the same region, the San Francisco Bay Area. Having all of our eggs in one geographic basket led me to not take a salary for three and a half years, during which time I became a real Abraham Maslow nut reading all kinds of books by this mid-20th century psychologist. I then applied his self-actualization-driven Hierarchy of Needs theory to how we created deeper relationships with our employees, customers, and investors. In the end, Joie de Vivre flourished during a difficult time and a new psychology of business was sprouted, which I applied to the company and came to realize was being used – in various forms – in other peak-performing companies.
So, I was telling this story on my book tour and the employee’s wife I mentioned came up to me after I spoke. She said she’d told my tale to probably 50 people because it was like describing a Jimmy Stewart film in which the good guy wins in the end. As she was describing my story back to me, I realized she was following that arc of PASSION – HERO – ANTAGONIST – AWARENESS – TRANSFORMATION that “The Elements of Persuasion” speaks of. So, I asked her, “Why do you keep telling this story?” And, she responded, “All of us need the inspiration to believe that if you persevere with your passion, you will one day succeed. Your story gives people strength.” While I don’t recommend going through the fire the way my company did, it is more than gratifying to know that our story is now inspiring others.
So, the next time you’re trying to persuade your colleagues about a particular strategy or idea, consider telling a story. Maybe tell a true story of someone who’s tale might mirror what you’re trying to articulate. If it’s your own story, all the better. Or possibly tell a future story that describes the positive, transformative outcome of what might happen if your team pursued your path. Facts and figures can help rationalize your story, but it’s the raw emotion that will draw people in and help them to remember just what you had in mind. Change happens when people are inspired.
October 22nd, 2007
One of the most basic tenets of corporate marketing is that a company should focus its promotional investment on its target market. In other words, market to those who are most likely to buy from you. Seems simple enough and, having run a niche-oriented boutique hotel business for more than two decades, I can say that this focused approach creates great bang for the buck.
But, I want to share a story with you that may shift your thinking from being a marketing mercenary to being a marketing missionary. A marketing mercenary focuses on the return on investment (ROI) associated with marketing to their target market. 95% of what my company, Joie de Vivre Hotels, does fits this category. But, every once in a while, it helps to throw a “Hail Mary pass” - a marketing promotion that is more about your company’s mission than it is about your product. If you can get this right, you will develop huge long-term benefits because you will create stories, memories, and goodwill that will last longer than any short-term marketing mercenary initiative you and your company could deploy.
Let’s take a step back before I tell you my story. As a devout believer in Abraham Maslow’s Hierarchy of Needs, I know that what engages the human spirit most is what’s at the peak of his pyramid: self-actualization, that transformative feeling when what ought to be, just is. For an employee, that’s when you feel that you are being “all that you can be” and you are getting great meaning or inspiration from your work. For a customer, that’s when experiencing a product or service gives you that transformative effect of “it doesn’t get any better than this,” or as MasterCard calls it, that “priceless” feeling that is truly intangible. Any company that can do this will create evangelistic customers as you see with those who are part of the Apple or Harley-Davidson flock. Companies that create “peak experiences” for their employees and customers naturally engender greater loyalty. These companies have much lower employee turnover and tend to spend far less in marketing. Fortunately, Joie de Vivre has employee turnover that’s one-third the hospitality industry average and our $200 million company spends less than $50,000 annually on print advertisements for our 40-50 hotels, restaurants, and spas. So, I guess we “get it.”
Creating peak experiences for employees and customers is a no-brainer. You gotta do it. But, recently, we created a peak experience for a bunch of strangers - albeit strangers who had something in common with each other and the company. To celebrate the 20th anniversary of Joie de Vivre, we invited 10,000 people (I’m assuming mostly women) from the state of California with the name “Joy” to a JOY PARTY at our luxurious Hotel Vitale on San Francisco’s waterfront. Our company has spent 20 years understanding the significance and responsibility of having a name associated with such a positive emotion so we thought it would be provocative to invite these women together to share their experience of living with this name their whole life. Excuse the pun, but we ended up with a roomful of joy (or Joys) — 125 women sharing the name with dozens and dozens of husbands, significant others, friends, children and even a few media there to capture the occasion. What was miraculous was how these strangers bonded in their storytelling so quickly. As if they were long-lost friends. It was remarkable how much they had in common and how many of these women had gone into the service or helping professions. One who received a special award from Joie de Vivre that night talked to the group about the Seeds of Joy non-profit she’d created to help facilitate more poetry therapy in the world. Others spoke of how their name was a daily reminder of their purpose in life (something we often talk about in our company - why not name your company after your mission statement?!). It was one big “joy bubble.” Lots of tears of joy flowing. For the couple of dozen Joie de Vivre employees who came to the event, it was truly a highlight of their time with the company to see that we could conceive of and create such an event that brought what will be a lifetime memory to these women. And, since the event, we’ve shared many of the emails and letters we’ve received from these Joys with our employees (25 Joys received a free hotel room at the Hotel Vitale so they could have a Joy slumber party).
Creating a peak experience for a stranger? A waste of marketing dollars? I don’t think so. While I think it could be dangerous to allocate the majority of your marketing funds to a missionary event like this, I also believe that the word-of-mouth (which has been huge for our JOY PARTY) and internal and external goodwill that comes from this kind of marketing proves that being a “karmic capitalist” pays off in the long-run. Doing good can mean your company will do well. The next time you’re thinking about how to make a splash with your promotions, think about making a difference in someone’s life in a profound way that will serve as a peak experience for them. While other marketing ploys may fade with time, those marketing initiatives that have a deeper mission attached to them will stand the test of time and give you a remarkable long-term ROI.
October 8th, 2007
Previous Posts
