Courage and Faustian Bargains

A recurring theme in my MBA course on business strategy this semester was courage.

Executives need courage to create breakaway products that offer consumers a compelling value proposition in ways that are meaningfully different from competition. Such executives are not afraid to break from competitive norms; to go beyond the safe boundaries of incremental improvements. Think Tesla, Post-It Notes, Swiffer and Ikea.

And executives also need courage to go all-in in ensuring that the company’s resources, assets and management incentives are fully aligned to support the breakaway strategy.  Such executives become personally vested in, and identified with their business strategy, earning justified glory or job-ending rebuke, depending on outcomes.  Think Nicolas Hayek at Swatch, Steve Jobs (second time around) at Apple and Dave Barger at jetBlue.

The products and executives cited above provide inspirational stories of creative leadership, driven by  leaders who live by the credo of “no guts, no glory.”  But what are the implications for MBA graduates most of whom are about to enter the corporate workforce in entry level positions?  They are not initially in a position to exert courageous leadership.  Or are they?

A guest speaker in my class near the end of the semester — entrepreneur, author, blogger Seth Godin — urged my students to approach their first (and every) job with the mindset to “make a ruckus” and “don’t be afraid to be fired.”  In short, Godin was rendering themes from my  course in very personal terms.  Customer centricity and playing to win (as opposed to playing not to lose) are not just mantras for corporate leaders, but a code for all to live by.

Now it’s easy for financially secure elders like Godin and myself to proselytize a message of personal leadership, driven by the principles of effective strategy without fear of rocking the boat. But what if you’re just feeling your way around a new job in a new company whose paycheck is critical to repairing your post-MBA balance sheet?  How and where do you draw the line between pushing for constructive change and being a good team player in supporting your company’s current business direction?

My short answer is there is no hard line, it’s a decidedly personal decision, but nevercompromise being honest with yourself about what you’re doing and why.

It’s quite natural for students to approach their first post-MBA job with a combination of optimism and excitement.  But once on board, what would you do if you find yourself becoming  concerned and ultimately convinced that your company is headed in the wrong direction?  You have three choices:

1. Persistently push (as hard as you feel comfortable) to achieve constructive change
2. If repeatedly unsatisfied with your efforts in #1, leave for a more enlightened employment alternative
3. Ignore your misgivings and embrace corporate doctrine in the hope of kudos, bonuses and promotion down the road
   
   

If you’re inclined to slide into choice #3, you might want to rethink whether working in an environment that doesn’t respect or address your perspective and/or in any event that is headed in the wrong direction is a place you want to work over the long term. Being dishonest with yourself or ignoring your instincts is a Faustian bargain.
Here’s a hypothetical example to put this question to the test.  Suppose you accept the premise that strategy should be  formulated from an “outside-in” perspective — that is, the highest priority being to create and consistently deliver a compelling consumer value proposition. Internal capabilities, incentives and corporate policies should be aligned and managed towards supporting this end.

That all sounds reasonable enough, but the reality is that companies vary widely in their commitment to operate in such a fashion.  Watch what companies do, not what they say.  Every company says that they value their customers, but there is a wide variance in perceived customer satisfaction across industries to suggest otherwise.
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For example, the exhibit below displays 2013 results from ACSI, a spinout from the University of Michigan, on customer satisfaction by industry on a 0-100 index scale.

​You probably shouldn’t be surprised to see that companies in the red zone — broadband/ISPs (e.g. Comcast), subscription television (e.g. Time Warner), airlines (e.g. United) and wireless telephone providers (e.g. AT&T Mobility) score quite poorly in delivering an appealing customer experience.  There are a few bright spots (e.g. jetBlue), but by and large, companies in these industries have knowingly implemented business practices that extract revenue in ways that aggravate their customers.

Now suppose you were hired in as a freshly minted MBA to manage Policy Assessment and Strategy for the Customer Service Group of one of the lower performing companies in one of these industries.  After a few months into the job, with due diligence under your belt from proprietary company surveys, auditing customer service calls and internal management interviews, you report your initial findings to your boss.

For starters, you confidently summarize what you believe to be the root causes of your company’s chronically poor customer satisfaction performance:

• Multiple hidden fees and penalties
• Deliberately confusing prices and rate plans
• Inflexible service plans that lock consumers into long-term contracts
• Bundled offerings forcing consumers to buy services they don’t value or want
• High prices
• Unresponsive or inflexible customer service
  
  

But before you go any further, your boss interrupts to limit the discussion to suggested improvements to only the last item on the list. “We have no control over the business policies of the company,” she says, “so let’s just focus on what we can control in this department.”

With MBA case studies still fresh in your mind on the success of truly customer-centric companies, you object, noting that focusing only on post-transaction customer complaints is inherently self-limiting and will ultimately reduce lifetime customer value.  But your boss adamantly asserts that corporate management is well aware of the frequency and source of complaints received by customer service, and “they’ve done their homework to determine the  profit-maximizing business model.”

You’re tempted to press further — questioning the time frame for the analysis, or whether customer churn impacts have been fully incorporated in the analysis — but your boss’ mien signals this conversation is over, at least for now.
So now what?  You’ve essentially been asked to put lipstick on a pig, whose behavior is largely outside your control.
You hopefully should get the opportunity to revisit your company’s broader business strategy questions, after having more time to gather evidence, to substantiate your recommendations and to get more savvy about internal politics.
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But the the possibility — and likelihood, given your current position in the company — still remains that you will be unable to instigate a personally satisfying course correction in the company’s strategy.  Let’s say you’ve been at it for sixteen months, and it’s time to revisit doors #1, #2 and #3.