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Verne Harnish: Listen To Scale

Engaging customers has always been a critical CEO skill, but to win in the age of Amazon, Verne Harnish, bestselling author of Scaling Up and Mastering the Rockefeller Habits, says it’s become downright existential. Here’s what he means, and how to do it right.

Number three, it’s the millions of people who have voluntarily provided detailed reviews—he has tapped into the crowd. That’s why the fastest growing part of Amazon right now is their search. They’re the biggest threat to Google they’ve ever had. If you’re looking for any particular product, you don’t go to Google. You don’t even go to the manufacturer—if they even know who that is—they go right to Amazon because Amazon has the reviews.

And what they paid those millions of people to write those is nothing. So if you’ve got millions of people supporting your business model for which you have to pay zero, that’s a really good business model.

If you’re not digitally born, how do you begin to make this change?

You need to tap into the brains of your employees. If you think you as the CEO and your senior team are smart enough alone, that’s your first fatal mistake. It took ego to get started, but it’s going to be your ego that crushes the business.

So it starts with tapping into the broader knowledge of your employees. Very specifically, I’d share the story of my partner John Ratliff. He scaled up a sizable call center business through 24 acquisitions. This is not Facebook or Google. This is call centers, 650 employees. He created an app on Salesforce [to solicit ideas from employees]. When he launched it in his first 90 days, he got 10,000 ideas from his employees. Many of those ended up delivering millions of dollars of EBITDA to John’s customers, which made them stickier. In the call center business, the average profitability is four percent. John drove that to 21.8 percent. That’s better than Apple’s profitability last year.

Step two is to really begin to engage your customers in conversation. One of our early clients was a company called Citizen. They only had seven major government agencies as clients. They’re a government contractor. B2G, if you would. Their very first 90-day theme, we called it CSI, customer satisfaction investigation. They engaged in reaching out to 20 of the key people within these government projects they were working on.

It looked like they had seven customers but really, within each of those, there were hundreds of people that would influence those projects. At the end of 90 days, they discovered about $87 million worth of additional business they could mine within their existing seven clients.

Then last, you begin to engage the broader tribe, if you would, or hive. In the old days, like when I did The Rockefeller Habits, I wrote it, published it, and it was in the marketplace. With Scaling Up, I said, “Hey, why don’t I put 500 copies out to the market and get their feedback and input?” [Readers] came back and said, “You may be the ‘Growth Guy,’ Verne, but your baby is both ugly and stupid.” Several of them gave me volumes of critique down to specific wording of sentences.

I put my tail between my legs and rewrote all 70,000 words. I guarantee you it would not be approaching 400,000 copies out in the marketplace if I had not set my ego aside and tapped into our own employees, our coaching partners, our customers and the broader market in order to shape that product, that IP. So, that’s how us mere mortals do this.

So, it seems the fundamentally most important skill of our time for a CEO is listening—as opposed to creating culture, mastering technology and all of that?

Let me preface it, though, with one thing: My favorite quote of all time, “We have the answers. It’s the question we do not know.” In the early days, you had to have the answers. Today, if you think you have the answers, that’s your fatal mistake. It’s the ego problem.

Our focus is helping CEOs and leadership teams frame the right questions. That’s why we’re very precise about the four questions you ask a customer. What you really need to hear from a customer so it doesn’t waste your time. So, yes, you’ve got to listen, but it’s better if you can drive it with the right questions.

It really is about the CEO and the leadership team immersing themselves with the customer and the marketplace, and spending a lot of time talking about that at their weekly meeting.

It really does come down to that: What are you discussing at your weekly meeting? Internal issues or what’s happening in the marketplace? That’s one of your key metrics. The percentage of time spent at your weekly meetings: What are you talking about?

A lot of folks would rather just deal with things within the walls of their companies.
Precisely. And that’s where it comes around full circle. That’s the technology all the unicorns are using—A.I., machine learning and technologies to monitor and gather insights about the marketplace that are difficult for mere mortals to handle. So you really do have to get on that side of the equation—on the customer side.

Harnish: Here’s What To Ask Your Customers

1. “How are you doing?”
Get them talking about themselves immediately. They want to talk about them, not us. Ask them detailed follow-ups. Maybe I want to know, “Hey, what’s your bonus type?” I don’t want to know what your bonus is. But what’s your bonus type? Because if I know that, and then I can frame my product to help you get your bonus, that’s a huge win. So, first, I want to find out what’s going on with them.

2. “What’s going on in your industry/neighborhood?”
Talk more generally about what’s happening in your industry if it’s B2B or what’s happening in your neighborhood if it’s B2C, and begin to get some insights into how they’re thinking, what’s going on in their industry.

3. “What do you hear about our competitors?”
The third question, which people are often reticent to ask, is really the most insightful. Because if you don’t think your customers are being pounded by your competitors, your head is in the sand. I get more and better intel about my competition through the customer’s eyes than I do through my own eyes. The only way you win is to be different in the marketplace. The only way to know that you’re really different is to get this intel from customers and how they perceive you versus that competitor.

4. “How are we doing for you?”
The point of the fourth question is that it should be asked  last, not  first. There’s a tendency to ask “how are we doing” first—but that’s not customer centric, that’s “us” or “me” centric.  Customers (people!) want to talk about their favorite subject: themselves.


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