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12-13-19

HOW HAGERTY UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-PostHagerty

Hagerty (www.hagerty.com) is the world’s largest provider of specialty insurance to vintage vehicle enthusiasts. They employ more than 1,100 people, have offices in the United States, Canada, Germany, and the United Kingdom, and insure over 1.4 million vehicles.

They keep their car-obsessed company driving in One Direction with a One-Page Plan.

The company was started by Frank and Louise Hagerty in 1984 as an insurer of classic wooden boats. In 1991, they refocused the business on classic cars. Today, Hagerty insures everything from entry-level enthusiast vehicles to multi-million-dollar one-of-a-kind collectible cars.

McKeel Hagerty, son of Frank and Louise, took over as CEO in 1997. At the time, the company had just 50 employees. McKeel has led the company’s expansion and evolution into an automotive lifestyle brand dedicated to the love and protection of driving, and the world’s largest provider of specialty insurance to vintage vehicle enthusiasts.

In addition to insurance, Hagerty is now home to:

  • Hagerty Drivers Club, the world’s largest community for automotive enthusiasts.
  • Hagerty, the magazine, which is among the highest circulation car magazines in the country.
  • “The Barn Find Hunter,” one of the most popular automobile focused shows on YouTube with nearly 700,000 subscribers.
  • DriveShare, the nation’s only peer-to-peer classic vehicle rental marketplace.
  • MotorsportReg.com, North America’s largest motorsport membership and event management system.

To keep his rapidly expanding business aligned, Hagerty implemented the “Rockefeller Habits,” a management system popularized by Verne Harnish. A key component of the Rockefeller Habits system is the One-Page Strategic Plan.

Here is how Verne describes the One-Page Plan, “The bigger your company gets, and the faster it’s growing, the harder it is to get everyone on the same page. The problem, of course, is that there isn’t a single page around which to align.”

“The Rockefeller Habits provided the framework we needed, but as we grew, we drifted away from it,” explained Hagerty. “In 2017, we recommitted to the process.”

Hagerty has found tremendous success with the Rockefeller Habits, but it may not be for everyone. “What you’re fighting is entropy,” says Hagerty. “The Rockefeller Habits, like life, require daily doses of energy to work. If a company is not prepared to 100 percent commit to executing the habits, the effectiveness can slip away.”

“Our business is complex—but complexity is a choice,” explained Hagerty. “The One-Page Plan allows us to create hyper-focus.”

In addition, Hagerty uses software from AlignToday (www.aligntoday.com) to implement strategic alignment at scale.

While the business is intense, one of their values is “enjoy the ride.” In 2018, McKeel renewed his commitment to living this and, on his days off, he can be found tooling around in one of the 25 classic cars he owns. Hagerty’s first car was a red 1967 Porsche 911 S he purchased when he was 12 and restored with his dad. He still has the car. My kind of guy!

Does your plan create “hyper-focus?” 

NOTE:  This is an excerpt from my book, Drive One Direction.

12-12-19

HOW IDEXX UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_Idexx

IDEXX Laboratories, Inc. (NASDAQ: IDXX) is a global leader in pet care innovation with over 8,000 employees serving customers in over 175 countries.

They create alignment with a comprehensive strategic planning process.

Over 68 percent of U.S. households have a pet. That translates to 80 million dogs (I have two of them), 58 million cats (sorry, but I don’t like cats), and all kinds of other animals—birds, fish, snakes, and more. (I hate snakes!)

When you take your pet to the vet, there is a high probability that IDEXX’s tests and equipment are used to evaluate your pet’s health. They offer an extremely broad product line, organized into distinct lines of businesses, each run by a general manager.

Fast-lane companies like IDEXX use both the planning process and the codified plan to accelerate alignment.

A well-designed planning process should be the catalyst that helps your company confront the critical issues, debate potential strategies, evaluate alternatives, and allocate resources. In addition, an effective planning process “connects the dots” between the company’s vision, goals, strategies, plans, and budgets.

IDEXX’s Chief Financial Officer, Brian McKeon, uses an open and highly collaborative planning process to drive alignment. “We are very transparent with information,” explained McKeon. “Our planning process is a byproduct of our open, cooperative culture.”

The process starts each February by identifying the three or four critical strategic questions and “cross-cutting themes” that are critical to the business. Over the next few months, the executive team has multiple meetings—they call them check-ins—to discuss and unpack these questions.

“By the time we get to the multi-year plan review in May and June this up-front work and collaboration on key areas adds depth to our strategic thinking,” said McKeon.

At the end of this process, they have high alignment on resource allocation priorities and key areas of execution for the annual operating plans.

IDEXX’s planning process creates benefits for all stakeholders, including shareholders.

“We are proud to have built a business model with enduring and predictable growth and profit dynamics,” explained Jonathan W. Ayers, IDEXX’s Chairman and Chief Executive Officer. “Perhaps this is why we are part of a small minority of companies that provides earning guidance in the Q3 call for the next calendar year. Note that this has been our practice for every year for the last 15.”

Clearly, McKeon’s planning process has produced results. Since he joined the company in 2014, their stock has nearly quadrupled.

Who drives your company’s planning process?

NOTE:  This is an excerpt from my book, Drive One Direction.

12-11-19

HOW SALESFORCE UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-PostSalesforce

Salesforce (NYSE: CRM), the pioneer of cloud computing, has 150,000 customers, including more than 400 of the Fortune 500, more than 34,000 employees, and millions of Trailblazers—the individuals and organizations who are using Salesforce to drive innovation, grow their careers and transform their businesses. Founded in 1999, they have surpassed the $10B annual run rate milestone faster than any enterprise software company in history.

Salesforce powered their amazing growth with One System.

Since their founding in 1999, this incredible company has managed the business with a system called “V2MOM” which stands for vision, values, methods, obstacles, and measures.

Even more amazing is the fact that the management system was designed by Marc Benioff, Salesforce’s founder, Chairman, and Co-Chief Executive Officer. Benioff describes the system in detail in a blog post on the Salesforce website:

“Essentially, V2MOM is an exercise in awareness in which the result is total alignment. In addition, having a clarified direction and focusing collective energy on the desired outcome eliminates the anxiety that is often present in times of change.”

“I've always thought that the biggest secret of Salesforce is how we've achieved a high level of organizational alignment and communication while growing at breakneck speeds. While a company is growing fast, there is nothing more important than constant communication and complete alignment.”

“At Salesforce, everything we do in terms of organizational management is based on our V2MOM. It is the core way we run our business; it allows us to define our goals and organize a principled way to execute them; and it takes into consideration our constant drive to evolve. The collaborative construct works especially well for a fast-paced environment. It is challenging for every company to find a way to maintain a cohesive direction against a backdrop that is constantly changing, but V2MOM is the glue that binds us together.”

High growth and complete alignment. Music to my ears!

Clearly, the system has worked. In addition to their impressive growth rate and stock performance, Salesforce has been recognized for 11 years in a row as one of Fortune's “100 Best Companies to Work For.” Further, Forbes ranked Salesforce as one of the “World's Most Innovative Companies” for eight years in a row and Fortune named Salesforce one of the “Most Admired Companies” for five years in a row. They have been named a Fortune “Change the World” company for the last three years.

Standardizing on One System is a tremendous way to unleash the accelerating power of alignment. Some companies, like Salesforce, decide to build One of their own.

Does your company’s planning process enable both high growth and complete alignment?

NOTE:  This is an excerpt from my book, Drive One Direction.

12-10-19

HOW GOOGLE UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-PostGoogle

Google (NASDAQ: GOOG) has a huge mission: organize the world’s information and make it universally accessible and useful.

They keep everyone—and everything—aligned with a system known as “OKRs.”

The “Objectives and Key Results” model was developed by Andy Grove at Intel.

John Doerr, the chair of venture capital firm Kleiner Perkins, introduced the OKR system to Google in 1999, shortly after investing in the company. He describes OKRs as “a management methodology that helps to ensure that the company focuses efforts on the same important issues throughout the organization.”

The first step in the process is to develop objectives. Objectives are sometimes described as “strategic themes” or “burning imperatives.” Companies generally set no more than five corporate objectives. They should be clear, ambitious, and inspirational. For example, one of your objectives might be to “Develop a world-class workforce.”

The next step is to develop a set of key results for each objective. These are specific, measurable, and much more tactical. Most companies will have three to five key results for each objective. For example, you might set a key result to “increase employee engagement from 75 percent to 85 percent.”

These are company-wide OKRs, but for greater alignment, OKRs are often used at all levels. This helps ensure that all work is aligned with your goals.

“At our scale, it’s important to focus and do it well,” Sundar Pichai, CEO of Google, explained, “When you can align people to common goals, you truly get a multiplicative effect in an organization.”

There are a few aspects of Google’s OKR model that differentiate them from other management systems.

First, OKRs are based on transparency. Everyone can see everyone else’s OKRs.

Second, at Google, OKRs are reset quarterly. They have done this since the beginning. Thus, for over seventy-five consecutive quarters, Google executives have thoughtfully and deliberately worked through the goal-setting and alignment process.

Third, Google separates the OKR process from the HR performance appraisal process. That is because they want the company—and every employee—to set extremely ambitious “moonshot” objectives.

In the nearly twenty years since Doerr introduced OKRs, Google has grown to over 80,000 employees. And OKRs have been a key component of their success.

“OKRs have helped lead us to 10X growth, many times over.” said Alphabet CEO and Google co-founder Larry Page. “They’ve kept me and the rest of the company on time and on track when it mattered most.”

The OKR model has worked for Google—and hundreds of other companies.

What methodology does your company use to set and cascade goals?

NOTE:  This is an excerpt from my book, Drive One Direction 

12-09-19

SPEED READING -- ONE PLAN

LinkedIn-Post_OnePlan

Every company makes plans.

For some, their long-range strategic plan outlines what they are going to do after lunch.

Fast-lane companies use both the planning process and the codified plan to accelerate alignment.

Unfortunately, according to Bain and Company, only 60 percent of executives think that their company’s planning process is effective.

Ideally, the output of an effective planning process is One clearly codified Plan. Most corporate plans contain the following elements:

  • A strategic plan
  • An annual operating plan
  • A financial forecast and associated departmental budgets
  • A headcount plan
  • Strategic initiatives (the critical few) that are essential to accomplishing the plan

Ideally, your company will have just One Plan.

To document the plan, some companies create a deck of slides, some create a narrative, some create infographics, and others use cloud-based software.

Our preference is to summarize it on One Page.

Regardless of how you document it, it is imperative that you effectively communicate it.

Obviously, people cannot execute a plan they don’t understand.

In this chapter, we will explore the planning processes that Google, Salesforce, IDEXX, and Hagerty used to unleash the accelerating power of alignment.

NOTE:  These stories are excerpts from my book, Drive One Direction

12-06-19

HOW FOUR SISTERS UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_Foursisters

There are millions of restaurants in the world.

Four Sisters is—by far—my favorite One!

Four Sisters (http://www.foursistersrestaurant.com) is an award-winning Vietnamese restaurant in Falls Church, Virginia.

Originally from Bien Hoa, Vietnam, Kim Lai, his wife, Thanh Tran, their four daughters, Ly, Le, Lo Ann, and Lieu, and two sons, Hoa and Thuan, immigrated to the U.S. in 1982. Although Kim was a successful entrepreneur in Vietnam, the family came to America with nothing and essentially had to start over.

Kim started working in a food truck that sold hot dogs and other items to tourists in Washington, D.C. Eventually, he was able to buy his own food truck and grew the business to eight trucks.

In 1993, the family opened their first restaurant, a tiny place in the back corner of the Eden Center, an international shopping center in Falls Church, Virginia. It was called Huong Que, roughly translated as "taste of home.”

Driven by Kim’s entrepreneurial spirit and Thanh Tran’s cooking, the restaurant quickly built a loyal following. In 1996, they were able to move to a larger space in a better location in the Eden Center. The four sisters—who are all strikingly beautiful—worked as hostesses and waitresses, and the restaurant started to be known as both Huong Que and Four Sisters.

They moved to their current location in the Merrifield Town Center in 2007. The family used the move to formally rebrand the restaurant as Four Sisters. They also saw it as an opportunity to design a unique customer experience.

Four Sisters blends four unique elements to create their unique Wow!

The first thing you notice upon entering the restaurant is the amazing flower arrangements. Le, the second-oldest sister, creates these herself. The multiple arrangements each consist of hundreds of flowers. She changes them every Thursday, so every visit provides a unique surprise.

“I can’t cook,” Le confessed, “but I am passionate about flowers. It is a labor of love.”

Next, you will notice the amazing artwork. Le commissioned the paintings in Vietnam, and they took over six months to make.

Another aspect of the Four Sisters Wow! is the staff. While most restaurants experience tremendous turnover, many of the staff have been with the restaurant for decades. A few have been with them since the beginning. “We are like a big, extended family,” explained Le.

And last—but certainly not least—is the delicious food. The menu is extensive—there are 152 unique dishes—including traditional Vietnamese favorites and French-inspired specialties such as Sup Mang Cua (crabmeat and asparagus soup).

In the beginning, Thanh Tran made everything herself, largely by feel. As the restaurant grew, they had to codify the recipes so that other chefs could deliver each dish perfectly every night.

I have been to hundreds of Vietnamese restaurants, but there is nothing like Four Sisters. For over two decades, they have delivered their unique, One-of-a-Kind experience with amazing consistency. This is why they have thousands of fans—like me—who eat there as often as possible.

Does your customer experience differentiate your company from everyone else?

Note: This is an excerpt from my book, Drive One Direction.

12-05-19

HOW CROSSFIT UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-PostCrossfit

CrossFit (www.crossfit.com) has a global network of over 13,000 gyms known as affiliates. Their Facebook page has over 2.2 million followers. In addition to affiliates, there are CrossFit Games, CrossFit clothes, and a portfolio of accessories.

CrossFit unleashed the accelerating power of alignment with One Workout.

CrossFit is a fitness regimen developed by Greg Glassman. It is designed to optimize physical competence in ten fitness domains: cardiovascular and respiratory endurance, stamina, strength, flexibility, power, speed, coordination, agility, balance, and accuracy.

The Workout of the Day (WOD) is a key component of the CrossFit model. They describe their exercise philosophy this way:

CrossFit is constantly varied functional movements performed at high intensity.

All CrossFit workouts are based on functional movements, and these movements reflect the best aspects of gymnastics, weightlifting, running, rowing and more.

While CrossFit challenges the world's fittest, the program is designed for universal scalability, making it the perfect application for any committed individual, regardless of experience. We scale load and intensity; we don’t change the program. The needs of Olympic athletes and our grandparents differ by degree, not kind.

CrossFit gyms—affectionately known as “boxes” for their austere warehouse environment—are independent affiliates, not franchises. The affiliate licenses the CrossFit brand, but operates very independently.

Interestingly, while CrossFit “headquarters” publishes a new Workout of the Day every day, the affiliate gyms are free to use it or to develop their own.

In fact, a quick scan of the CrossFit affiliate gyms near my house revealed that none of them was using the WOD recommended by CrossFit headquarters for that day. Each affiliate had developed its own WOD.

While the specific exercises were different, the essence of the CrossFit WOD experience was maintained. Thus, CrossFit created an ecosystem of affiliates that are aligned in spirit.

This is an interesting approach to alignment. The corporate standard is really just a corporate suggestion, but it works for them. The CrossFit model of creating alignment in their ecosystem is aligned with their business strategy and corporate culture.

Alignment is always a balancing act between standardization and flexibility. CrossFit found the balance that works for them and their affiliates.

How does your company align your ecosystem to deliver your Wow!?

Note: This is an excerpt from my book, Drive One Direction.

12-04-19

HOW COSTCO UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_Costco

Costco Wholesale (NASDAQ: COST) is the second-largest retailer in the country with over $138 billion in sales. They have 243,000 employees, 773 warehouses in 10 countries, and 97 million members.

While no one will confuse Costco with The Ritz-Carlton, they also deliver an amazing Wow!

Costco’s customer experience starts with their membership model, which creates an amazing alignment of interests. Once you pay your annual fee, you have an incentive to maximize the value of your membership by spending more at Costco. Thus, both customers and Costco have exactly the same goal—to maximize sales!

The revenue from membership fees is almost pure profit, and it typically makes up nearly 100 percent of Costco’s net income. With this high-profit annuity as the baseline, Costco prices merchandise to just barely cover costs. Thus, customers know that when they see something at Costco, it is likely the best deal in town.

As a result, Costco has membership renewal rates above 90 percent!

Costco carries a wide selection of merchandise categories—everything from televisions to tires. But within those categories, a shopper's options are limited: the typical warehouse is stocked with fewer than 4,000 products, compared to 45,000 at a typical grocery store.

Costco is also the largest wine retailer in the U.S. While most wine retailers stock thousands of wines, a typical Costco store has only about 100. Most are low priced, but occasionally they will have very expensive bottles of French Bordeaux.

Shopping at Costco is a unique experience. To enter the warehouse, you must show your membership card. In a strange way, this creates a feeling of being part of an exclusive club—comprised of the world’s savviest shoppers.

Because shoppers know that everything at Costco is “a great deal,” it is very easy to buy things that were not on their shopping list. Customers come for a toaster and leave with a 72–inch high-definition television that was just too good to pass up. Most will enjoy the amazing selection of free samples or one of Costco’s legendary $1.50 hot dog meals.

The warehouses are austere. No plush carpeting. No fancy displays. Just concrete floors and metal warehouse shelving. Most of the merchandise is packaged in bulk, making it easy to buy a year’s supply of toilet paper.

While Costco does not call their employees “Ladies and Gentlemen,” they are always a big part of the customer experience. Costco has incredibly low turnover for a retailer—less than 1 percent for managers and less than 5 percent for hourly employees.

Over 75 percent of Costco warehouse managers started out as hourly employees, and their CEO, Craig Jelinek, started as a warehouse manager.

Costco proves that you don’t have to be expensive to deliver an amazing Wow!

The company went public on December 5, 1985, at $10.00 per share. If you had bought shares at their IPO, you would have a return of 13,447 percent.

Wow!

How does your business model impact your customer experience?

Note: This is an excerpt from my book, Drive One Direction.

12-03-19

HOW THE RITZ-CARLTON UNLEASHED THE ACCELERATING POWER OF ALIGNMENT

LinkedIn-Post_Ritz

The Ritz-Carlton (NASDAQ: MAR)* operates 91 hotels worldwide in 30 countries and territories. Their 40,000 employees are known as “the Ladies and Gentlemen of The Ritz-Carlton.”

They set the gold standard for hospitality.

In fact, The Ritz-Carlton (yes, the “The” is always capitalized) actually calls their service delivery system The Gold Standard. It includes The Credo, a Motto, Three Steps of Service, Twelve Service Values, The Sixth Diamond, and an Employee Promise.

While many companies have these kinds of things, The Ritz-Carlton takes them the extra mile.

Herve Humler, their President and Chief Operating Officer, explained it this way, “Have a clear, compelling, and ambitious vision. Make sure people understand the vision, talk about it daily, and live it always. If you don’t inscribe these things, they will go away.”

They reinforce this every morning. Each day, The Ritz-Carlton hotels around the world participate in a Daily Line-Up. All employees—from front-line staff to the Chief Operating Officer—participate in this daily meeting. This gathering aligns employees with The Ritz-Carlton culture. During this meeting, they share “Wow” stories (yes, they actually call them Wow stories) about an employee who went above and beyond to deliver a unique service experience.

In addition, all the Ladies and Gentlemen around the globe participate in the annual SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. By including everyone in this process, The Ritz-Carlton is demonstrating that every employee’s ideas are valued.

Financial information such as budgets and revenue are shared with everyone at The Ritz-Carlton. Ladies and Gentlemen are aware of financial goals and openly discuss numbers. Not only does this instill accountability, but it also fosters a sense of ownership.

While every guest is unique and has unique needs, The Ritz-Carlton’s Three Steps of Service explains how to deliver their unique Wow!:

  1. A warm and sincere greeting.
  2. Use the guest's name. Anticipation and fulfillment of each guest's needs.
  3. Fond farewell. Give a warm good-bye and use the guest's name.

Part of their unique formula is to empower people to go the extra mile without asking permission from their manager. In fact, every employee can spend up to $2,000 to satisfy a guest.

While The Ritz-Carlton’s service delivery philosophy is standardized, their hotel architecture is not. “We do not work to one design mold, but rather allow the process to be destination and customer focused.” Each Ritz-Carlton property around the world has a unique design reflecting its location.

Does your company empower employees to do whatever is necessary to Wow! customers?

 *The Ritz-Carlton is part of Marriott.

Note: This is an excerpt from my book, Drive One Direction.

12-02-19

SPEED READING -- ONE WOW

LinkedIn-Post_OneWow

Every company delivers a customer experience.

But most don’t deliver One that makes customers say “Wow!”

Bain & Company analysis shows that “companies that excel in the customer experience grow revenues 4%–8% above their market. That’s because a superior experience helps to earn stronger loyalty among customers, turning them into promoters who tend to buy more, stay longer, and make recommendations to their friends.”

Your company is already delivering some type of customer experience.

The question, however, is whether you are delivering a standardized experience that makes customers say “Wow!”

Obviously, your company has many customers. Each customer is unique and expects a customer experience that is custom-fit to their unique needs and wants.

However, fast-lane companies also standardize foundational elements of their customer experience. Thus, their unique Wow! is both standardized and customized.

To start the standardization process, identify One Experience that will appeal to all your customers. For example, you could ensure that every employee always calls every customer by name.

Over time, you can design a more robust customer experience that is a blend of multiple elements.

Of course, you can’t just develop a unique customer experience … you must deliver it.

Unfortunately, according to Gallup, only 27 percent of employees feel that their company always delivers what they promise.

Therefore, your company must develop the systems, processes, and culture to align everyone—and everything—to deliver your One Wow! … not one time but every time.

In this chapter, we will explore how The Ritz-Carlton, Costco, CrossFit, and Four Sisters unleashed the accelerating power of alignment by developing—and delivering—a standardized customer experience.

NOTE: These stories are excerpted from my book, Drive One Direction.