Author and Consultant, the Gallup Organization
Most American businesses have a relationship with their customers that is based solely on price. Is it any wonder, then, that companies are now having massive difficulties maintaining their margins? The challenge for 2003 -- and for the future -- is for companies to figure out a way to extend those relationships beyond price and engage their customers on an emotional level.
In late 2002, the Nobel Prize committee recognized the importance of the emotional economy by awarding the economics prize to Daniel Kahneman, a Princeton psychology professor. It was the first time the economic establishment admitted that a person's psychological makeup is the key determining factor in economic behavior.
For 2003, I'm intrigued by the questions following that insight: How big is the emotional economy? Are we mismanaging it? Have we even begun to scratch the surface of how we manage the emotions of our employees and our customers?
Through our studies at the Gallup Organization, we're just beginning to realize how economically valuable emotions are, and it's already clear that they're largely out of control. Analysts have even started to downgrade companies -- such as Wal-Mart and the Home Depot -- whose cultures, they believe, are eroding, even if their earnings are holding up. Even Disney is at risk. A company based on cartoons and theme parks, Disney was the poster child for building a brand based on emotions. But now its name is associated more with an entertainment conglomerate than with the businesses of animated movies and teacup rides. Disney has protected the form of Mickey Mouse but has forgotten his heart.
Companies need to realize that, as economic beings, we behave emotionally most of the time. You can either build your business around that fact or risk losing your customers to somebody who understands and cares for them better.
Chairman and founder, the Chasm Group LLC
Here in Silicon Valley, every company has one question for 2003: How do I sign new business? The answer? The only possibility of new business is as a replacement for old business. And the only people who can make that kind of decision are top-level executives. How? Your first job is to convince them that things are worse than they know. Don't reassure them. Provoke them: "We've been looking at companies in your category and the situation appears grim." Pause. "It's a terrible time to be wasting money in basic business processes -- and yet our experience tells us that your company is doing just that." Then make your pitch: "You could be losing so much money that you would be acting responsibly if you intervened right now, assuming there's a fix available. We're that fix."
If your prospective customer agrees that the situation is as serious as you say it is, then you and your team agree to do a free diagnostic review. In return, the prospect agrees that, if the diagnostic turns up a fix, he'll give you the business. I can't promise that this fix-the-leaky-pipe approach will work every time. But I can tell you that this is how Silicon Valley startups are slogging it out through the downturn.
President and CEO, Manchester Craftsmen's Guild and Bidwell Training Center
We may be entering a new year, but my focus remains the same: I'm still committed to converting inner-city communities into assets. The way I see it, our economy will always be troubled if we don't bring our most distressed communities back to life. The first step, and the most pressing challenge for 2003, then, is to get people on board -- corporate leaders, community folks, entrepreneurs, and educators -- and start revitalizing communities.
The change begins in schools. They're the focal point for economic revitalization. In cities such as San Francisco and Cincinnati, we're in the planning stages to build centers of excellence that will provide opportunities for kids to get a world-class education. Our vision is that these centers will be more than fully functioning, market-driven schools. On one level, schools provide value by working with kids and advancing literacy and math skills. On another level, schools become a way out of the fog for these communities. With top-notch schools, neighborhoods and communities have a real yardstick against which they can measure progress.
And schools go beyond education, even beyond the kids who attend them. Schools create a solid starting point for deep, important conversations about opportunities for economic revitalization to begin. By virtue of how they operate, well-run schools with high visibility are almost guaranteed to generate discussions that tap into a wide range of community interests and that attract the attention of community leaders. Schools can stimulate a shared belief in opportunities for businesses to grow and create a mechanism for people to come together around the physical rehabilitation of a neighborhood. My message for 2003 to business folks: Be a part of that conversation, and get in on it now.
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