Monday, December 12, 2005

When Messengers Are As Important As the Message

I read this quote in Harvard Management Update that rings true.

Professor Robert Mittelstaedt of University of Pennsylvania's Wharton School of Business was quoted as saying: “…you need to multiply every lost customer you do hear about by 10 more that you haven’t.” Customer problems that finally reach the CEO's office are usually so diluted and filtered that it is hard to have an accurate handle on reality. Multiplying by 10 every customer defection that gets to the CEO's office is an easy back-of-the envelope formula for leaders who want to hear before it is too late.

We all know of company examples where CEOs are the last to know of an internal or customer service problem. We also know that warning signs exist for some time before the final wake-up call. News accounts of the Enron scandal often describe whistle blower Sherron Watkins' prior attempts to inform Ken Lay of accounting shenanigans. Similarly, evidence of terrorist activity prior to 9-11 did not surface soon enough or with enough urgency.

CEOs have to want to hear the good news with the bad. Sounds easier than it is. Procter & Gamble's CEO Alan Lafley is described as living proof that the messenger is just as important as the message. Presumably Lafley hears what is really happening at P&G (where "customer is king") because he does not shoot the messenger but probably multiplies the message by 10.

Reputations can be destroyed with fleeting speed if customers defect or express dissatisfaction. If bad news reaches the corner office, you can bet that it is not the first time. Pay respect to your messengers.


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