Day: January 24, 2019
Performing Beyond Expectations
Creating and Adding Value
Quite a few years ago Frederick Reichheld and several colleagues at the Boston consulting giant, Bain & Company, were trying to explain growth and profit disparities among companies in the insurance industry. As the team explored evidence from a number of different companies they found something they didn’t anticipate. First, they realized that traditional competitive strategy models did not apply in industries where knowledge and intellectual capital were primary assets. Then, they searched further and learned that when companies were able to earn superior levels of customer loyalty and retention, they grew faster and earned profits that were consistently higher. They also learned that customer loyalty is closely linked to employee loyalty, which is earned by creating and delivering superior customer value.
Inspiring Loyalty and Creating Profitability
Reichheld and his colleagues tested the findings in other industries and discovered that they applied there as well. He explained, “… creating value for customers is the foundation of every successful business system. (It) builds loyalty, and loyalty in turn builds growth, profit and more value…. Profit is indispensable, of course, but it is nevertheless a consequence of value creation….” Essentially what Reichheld and his colleagues found is simple and yet profound. When leaders perform beyond expectations and enhance the customer experience in ways that add value, it inspires loyalty and increases profitability. It also turns customers into stakeholders, people who see themselves as having a stake in the future of the company, team or organization.
The Cal Ripken story provides an excellent illustration of this point. True, you might not normally think of athletes as leaders, yet lead is exactly what he did. In the season of 1995 when Mr. Ripken broke Lou Gehrig’s record of 2,130 consecutive games, he certainly performed well beyond any contractual expectations. Sure people may have had expectations for him, but by going above and beyond those expectations he created great value for the fans and inspired loyalty. From a market perspective, going to see one of Mr. Ripken’s games was perceived to be well worth the price of admission. There was value, not only in seeing a game but also in watching an outstanding performer make history in an incredibly graceful and benevolent way.
Benevolence and Commitment to a Higher Purpose
For example, he did not bask in the glory of his accomplishments, as he might have been expected to do. Instead, he took advantage of the opportunity to call attention to (ALS) the dreaded disease that claimed Lou Gehrig’s life. In a move that speaks to his character, Cal Ripken set up the Cal Ripken, Jr. / Lou Gehrig ALS Research Fund at Johns Hopkins to help with fundraising to find a cure. His unselfish commitment was demonstrated in his good sportsmanship and the way he gave back more than was expected to the game of baseball. It inspired fans and brought them out to the parks in great numbers.
In an environment of free agency and mistrust, this kind of commitment to a higher purpose is unusual but still very much admired. That’s why the leadership evident in what Cal Ripken did and how he competed became so inspiring. He’s clearly added value to the game and created a legacy that will not soon be forgotten. Whether they do it to benefit customers, employees or fans, when individuals lead this way it inspires others to follow. Performing beyond expectations as Ron Clark, Cal Ripken and others have done, provides benevolent examples of leadership. Beyond that leadership like this not only adds value to their organizations and its stakeholders, it also builds loyalty in ways that continue to be profitable.
