What Is The Linchpin Formula For Optimizing Stakeholder Experience And Value?   Part One

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In his 2011 Book, Linchpins, Seth Godin laid out what is essentially an experience improvement formula, or templated recipe, whose five ingredients are culture and purpose, human emotions, brand equity, actionable stakeholder data, and perceived value.  If these elements can be scientifically, strategically, and artfully commingled, results are invariably impressive.  As Godin concluded:  “When your organization becomes more human, more remarkable, faster on its feet, and more likely to connect directly with customers, it becomes indispensable.”

Each of these recipe’s five components is not only essential, but requires linkage to each other and to overall business outcome goals, if the enterprise is to attain desired strategic results.  In this article, we’ll look at the first two:  a) Culture and Purpose and b) Human Emotions.

a)  Culture and Purpose

Like the late Zappos CEO, Tony Hsieh, I’m a strong believer that  “Your culture is your brand.” In his words, brand is a lagging indicator of culture.  The brand, culture, and processes of a company are interconnected.  They affect each other.  For a brand to thrive, and for advocacy to be attained, company culture needs to be stakeholder-centic and, ideally, purpose-driven. Communication and transparency are core to stakeholder-centricity.  Further, when organizations are culturally focused on ‘greater good’ value elements, such as we see in Conscious Capitalism companies (Whole Foods Market Patagonia, Google, Costco and, I’d submit, Subaru) this resonates both inside and outside of the company.

Covid-influenced working conditions have contributed to employee disconnection from company culture, disaffection, and even emotional burnout, resulting in high prospective churn rates in many business sectors, i.e. “The Great Resignation”. Employee disconnection and discontinuity also have both an indirect and a direct impact on customer behavior. As viewed by many consulting organizations in their evaluations of this unfolding era of chronic talent shortages coupled with low unemployment rates, the conjoined, common themes of enterprise humanity and reframed purpose seem to be among the most attainable stakeholder prescriptives for dealing with the current employee landscape.

So, the state of organizational culture has tremendous and undeniable influence on both customer and employee behavior. In the famous words of Peter Drucker, “Culture eats strategy for breakfast.” Unfortunately, and rather irrespective of the beliefs of some corporate leaders and consultants, no amount of strategic corporate sophistication and modeling can work a company out of a toxic, unfocused purpose, and non-humanistic culture. It must come through disciplined leadership, investment, assessment, and change.

This was addressed in the seminal book, Firms of Endearment, where authors Sisodia, Sheth, and Wolfe identified the essence of this kind of culture: “The passion, energy, dedication, generous spirit and expansive creativity found in every Firm of Endearment are products of their culture……It exerts a strong, transformational influence on those who experience it, especially employees.  Employees pumped up about their companies infect customers with their enthusiasm.  Customers reciprocate with their own enthusiasm to round out an exquisitely symbiotic relationship whos significance is lost to those who gauge companies principally through numbers” (p.168). The challenges for many organizations, though, is that they have either minimally addressed or completely missed the impact of enterprise culture on the level of employee and customer connectedness, contribution, and commitment.

b) Human Emotions

Over the past thirty years, much of customer and employee research has focused almost entirely on the cognitive, rational, and functional elements of decision-making and behavior. Why? Well, researchers are (mostly) logical, and the cognitive and rational certainly looks logical – – and emotions, or emotional context within the enterprise culture, can be challenging and complex to measure.  Employee research progress has lagged behind the more progressive approaches to understanding customer value and behavior drivers. For years, especially in qualitative research, professionals endeavored to get at employee “feelings” involved when making job-related decisions, but that didn’t help very much.

As noted by Sigal Barsade and Olivia O’Neill in a Harvard Business Review article, “Manage Your Emotional Culture” (January-February, 2016): “Most companies pay little attention to how employees are – or should be – feeling. They don’t realize how central emotions are to building the right culture.” The sea change that occurred in marketing over the past decade, that is the movement from push to pull, has been profound. The consumer now has access to both formal and informal (online and offline word of mouth and other socially-based) information. Consumers are actively generating their own content; and this shift in decision-making control has forced concomitant change among corporations and researchers. It has, in the process, also created an awareness that stakeholder, i.e. principally employees and customers, must be more actively considered, inside and outside of the company culture.

And, to parallel this trend, academics have been actively studying the impact of emotions on various types of perception and decision-making. There has been a great deal of this, on subjects ranging from metaphor elicitation to emotional and personalized weight processing. Daniel Kahneman’s book, Thinking Fast and Slow, has been especially important for researchers as they endeavor to understand how subconscious emotions and memory impact decision-making and behavior. As my colleague Howard Lax stated in a recent post on the importance of emotions: “Emotions create connections or hooks’ that people can and will recall. Emotions give meaning to experiences and make them more relevant to our lives. The more meaning we attach to an experience, the more importance we give it, the more likely it is that we will feel emotionally connected in some way and the more likely that we will remember it. Experiences that don’t stir emotions simply have less meaning for us, making them more likely to be forgotten. The bland is inherently forgettable, like tasteless food and white noise.” This is, in essence, Kahneman’s Peak-End Rule, the emotions which remain after a stakeholder experience or set of experiences.

Stakeholder trust is a ‘feeder of emotion, and nowhere is trust more at constant risk than in financial services – banking, insurance, and investments. This stands to reason, since most consumers put great emotional and tangible return/coverage emphasis on protecting their earnings and nest eggs. Because this industry suffered such loss of trust during the recession, and more recently through bank failures and poor treatment of customers and employees, the companies that proactively show that they can create value and trust will be strategically differentiated, both in terms of culture and stakeholder value delivery. In TED-type fashion, there are several basic techniques for making this happen in the financial services industry:

1. Minimize irritating inefficiencies. For example, high-tech and virtual approaches may be great for the financial institution, but they often annoy and frustrate customers and put strain on employees.

2. Make the experience proactive and personal. Customers want to feel that interactions are personalized, and that their needs are a priority. This also brings employees into closer proximity with customers, enhancing their commitment and job experience.

3. Practice transparent and frequent communication. A company can’t go too far wrong if it assumes that the customer and employee wants to be kept current on important transactional details (without having to ping the provider); and, at the same time, the customer wants the provider available to answer questions thoroughly and conveniently, another area where employee behavior is featured.

4. Emphasize simplicity. The financial services industry gets a fairly well-deserved rap for making many insurance, investment, and banking transactions and decisions too complex and time-consuming. The rule here should be, as MBNA used to preach (before being acquired by Bank of America): “Think of yourself as the customer.” Customers will always lean toward simplicity because it feels more honest and open. And, again, this works on the employee side of the equation as well.

5. Understand your stakeholders. Don’t just find out what satisfies customers. Find out what creates and undermines personal advocacy and bonding behavior, and identify where experience can be improved. This ‘rule’ applies, equally, to employees. 

And remember, irrespective of industry, love (and other positive emotions) makes the stakeholder world go around.  There’s a quote from business columnist Thomas Stewart which neatly summarizes the power of organizational culture and purpose combined with core emotions.  In a  article from Fortune magazine published almost three decades ago, he wrote:  “Human beings want to pledge allegiance to something.  The desire to belong is a foundation value, underlying all others.”   It also sets up the remaining three ingredients of the recipe:  Brand Image and Equity, Actionable Stakeholder Data, and Perceived Value, which will be addressed in Part Two.

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.

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