Rich Karlgaard‘s latest column in Forbes reminds us of the value associated with market-based signals, especially the “loss” part of the profit-and-loss equation.
How many entrepreneurs, owners and CEOs, like [Dallas Cowboys owner Jerry] Jones, choose their egos over potential greatness? The list is depressingly long. One is reminded of Apple AAPL +0.55% cofounder Steve Jobs. In the early days Jobs was so ego-soaked that he’d steal credit for the inventions of others. He hired John Sculley as CEO and almost immediately tried to undermine him.
But then Steve Jobs did an amazing and rare thing: He outgrew his fatal flaws. He morphed from an immature egomaniac during the 1970s and 1980s into a superb team leader until his death, in 2011. What caused this transformation? His Apple ouster in 1985? The struggles of his successor company, NeXT? His purchase of Pixar, where he learned the power of a light-handed management style? Marriage and children? (By all accounts, Jobs was a devoted husband and father.) Whatever got Steve Jobs to trade in his ego for lasting greatness, it worked.
Howard Schultz of Starbucks had to do the same thing. In the late 1980s Starbucks hit a rough patch. Schultz was trying to expand his franchise around the U.S. as fast as he could. But at some point, after opening a few dozen stores, the model began to break down. Reports came back that customer service—an essential ingredient, perhaps more important than the coffee itself—was slipping.
Maybe Starbucks’ critics were right. Then, as now, it was hard to take a cult brand national, let alone global. The intangibles, which include magical customer service, didn’t, and don’t, always respond to size and scale.
The breakthrough occurred when Schultz came to accept that there’s an art to customer service that he himself doesn’t really get. Building a great service company requires a deep empathy for employees and employee culture that Schultz doesn’t have. He’s a type A, hypercompetitive, poor-kid-who-goes-to-college-on-a-sports-scholarship, successful-at-everything-he-touches kind of guy. Such people almost never have a gentle, empathetic touch.
So in 1989 Schultz did something quite courageous. He put his ego aside and hired an outsider—his opposite in temperament—to strengthen employee morale and build up customer service at Starbucks.
Would Jobs or Schultz have made customer-friendly changes to their operations if their success had depended on paying off politicians rather than earning a buck?
