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Its Never Too Late to Build

a Customer-Focused Company

KEN BLANCHARD is the founder of his own human resource development company, The Ken Blanchard
Companies. He is the author of numerous books, including The One Minute Manager, Whale Done! and
Raving Fans.
JIM BALLARD has enjoyed careers as an educator, corporate trainer, consultant and seminar developer. Mr.
Ballard has co-authored four books with Mr. Blanchard including Whale Done!, Mission Possible, Everyones
a Coach and Managing By Values.
FRED FINCH is a founding associate of the Ken Blanchard Companies. In addition to a career as a business
trainer, Dr. Finch (a graduate of the University of Washington) served for fourteen years as professor of
management and organizational behavior at the University of Massachusetts.
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Customer Mania! - Page 1

To succeed in business today, you have to provide consistently great customer service. In other words, unless you have a unified,
people-first, customer-oriented culture, it will be difficult to build your business going forward.
Fortunately, any company large or small can achieve this. The steps are simple to describe but challenging to implement fully:

How To 1 Set your sights on the right target

Build a
Customer- 2 Treat your customers the right way
Focused 3 Treat your people the right way
4 Have the right kind of leadership

Note that you cant build a customer-focused company by emphasizing the results that you want to achieve. This is the equivalent of
putting the cart before the horse. When you focus on results, getting people to do the right thing will be an effort people will have to be
convinced thats the right way to go. A much more effective idea is to concentrate on building your people first, and then they will just
naturally take care of the customer in the ways you prefer. Get your people acting with passion and commitment and everything else
will just naturally fall into place. With astute management, youll even be able to create a self-perpetuating cycle where the work feeds
the energy of the people involved, which in turn means the work gets done better, leading to increased levels of energy in the future
and so on.
If you want to get passion from people, make them number one. Thats the secret, right there. When you take the steps to building a
customer-focused company, you make people better than they are. Suddenly, your team is more interested in the enterprise; more
giving of their discretionary time, ideas and effort. Suddenly theyre more talented. Over the years, I have found that leaders in great
organizations, large or small, know how to build a customer-focused company the right way. They do that by leading at a higher level
and focusing peoples attention on more than making money. They understand the power of a people-first, performance-driven
culture and intuitively practice these four steps.
Ken Blanchard, Jim Ballard and Fred Finch

Step #1 Set your sights on the right target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2

If you set a goal of making more money, your customers and your people become a means to an end at
best. A better idea is to set a triple bottom line target view profits as the applause your organization gets
for taking good care of your customers and for creating a highly motivating environment for your people.
You dont have to choose between people and results, but organize yourself to achieve both. Your ultimate
aim should be:
1. To become the provider of choice because youve created raving fans for what you offer.
2. The employer of choice because your people are free to become customer maniacs.
3. The investment of choice because your profits are both strong and sustainable.
Step #2 Treat your customers the right way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 3
Instead of viewing customers as an unwanted distraction, all your organizations energy needs to be
focused on creating a customer mania culture. Dont try and create satisfied customers. Instead, your aim
should be to turn customers into raving fans. Put together a heritage library of stories of people who went
the extra mile to create customers who want to brag about what you do to others. Never forget the
customer writes everyones paycheck, and is the reason for your existence. Treat them accordingly.
Step #3 Treat your people the right way . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 4 - 5
Never talk about your people as being hired hands. Nor should you ever even contemplate getting rid of
people during tough economic times. Rather you should acknowledge that without enthused and
motivated people, you have nothing. Its impossible to treat your people poorly and then expect them to
create raving fans of your customers. Instead, you need to empower your people and encourage them to
think and act like business owners. Never lose sight of the fact that when your people leave work at the end
of each day, so does your entire business operation.
Step #4 Have the right kind of leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6
Most leaders like to take all the credit when things go well and apportion blame elsewhere whenever things
are going poorly. This is the opposite mind-set to what you want. Instead, you should acknowledge that you
as a leader are only as good as the people you work with. Instead of viewing yourself at the top of the heap,
move mentally to the bottom of the hierarchy where you can act as a cheerleader and provide support.
Replace an accumulation mind-set with a generosity mind-set. Focus more on serving and less on
accumulation and above all, do everything you can to make your organizations people successful. Never
lose sight of the fact that if your people win, your organization wins.
Case Study Yum! Brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pages 7 - 8
Customer Mania! - Page 2

To achieve the Triple Bottom Line, everyone in your enterprise

Step #1 Set your sights on the right target
will need a clear picture of the direction they should be heading.
In other words, everyone will need to have a compelling vision of
the future.
If you set a goal of making more money, your customers and your
people become a means to an end at best. A better idea is to set A compelling vision will have three essential elements:
a triple bottom line target view profits as the applause your
organization gets for taking good care of your customers and for A compelling vision
creating a highly motivating environment for your people. You
dont have to choose between people and results, but organize
yourself to achieve both. Your ultimate aim should be to become:
1 2 3
1. The provider of choice because you have create raving
fans for what you offer. Purpose tells A vision of your Values your
2. The employer of choice because your people are free to who you are firms future guiding principles
become customer maniacs.
3. The investment of choice because your profits are both
1. Your purpose should describe to people both inside and
strong and sustainable.
outside your organization who you are and what business
youre in. For example, Walt Disney described himself as
Great organizations are not one dimensional. Instead, being in the happiness business when he started his theme
everyones energy gets focused on a Triple Bottom Line: parks.
2. An effective vision of the future will detail what the future will
Triple Bottom Line look like when everything is up and running as planned. Walt
Disney wanted people to leave his theme parks smiling and
3. Values drive your peoples behavior as they work to bring
1 2 3
about your vision of the future. They describe how you want
To become the To become the To become the people inside your organization to act. In this area, less is
provider of choice employer of choice investment of choice more three or four values is far more effective than
expecting people to remember ten to twelve different values.
You also have to rank your values in order of priority so if
1. To become the provider of choice within your industry, you there is a conflict, people know how they are expected to act.
have to take care of customers better than your competitors For example, Disneylands values are: (1) Safety; (2)
do. This means converting ordinary customers into raving Courtesy; (3) The show and (4) Efficiency.
fans for your product or service customers who are so A compelling vision will provide long-term direction to an
enthusiastic about the way they were treated they want to tell organization. Once the vision is set, goals can be established to
everyone else. When you exceed the customers tell everyone what they need to be focusing on at present. Good
expectations, the chances increase that you can and will performance always requires clear goals, but these goals need
create a raving fan. to be made within the context of the vision rather than as discrete
2. These days there is much more competition for top talent. To and disconnected entities. This vision and clear goals need to
become the employer of choice is smart. Employees are far come from the organizations leadership. Everyone else is then
more likely to stay where they feel empowered and expected to be responsive to this vision.
motivated. It makes good sense to do everything you can to
retain your best people who can and will provide top service Profit is the applause you get for taking care of your customers
to customers. and creating a motivating environment for your people.
Ken Blanchard, Jim Ballard and Fred Finch
3. To reduce costs and increase profits, the best idea is to treat
your people like business partners rather than hired hands. My emphasis as CEO of this great company is on the vision. I
Business partners can read your profit-and-loss statements have to be like a third-grade teacher. I have to say it over and
and know precisely how your organization makes money. over and over and over again, until people get it right, right, right.
Theyre prepared to roll up their sleeves and help out Max DePree, chairman, Herman Miller
because they have enough information to make meaningful
decisions. By keeping your people well-informed and letting Wall Street and the pressures of business today make many
them use their brains, youll probably be pleasantly surprised people think that the only thing that counts is financial success
by the ideas they come up with on how best to manage your being the Investment of Choice. And yet few, if any,
costs. With any luck, these well informed people will also businesspeople would want their epitaph to include their
evolve into customer maniacs who will go out of their way to companys stock price or profit margin. The leaders in great
turn your employees into raving fans. Customers who love companies believe that people their customers and associates
what you do, combined with knowledgeable employees who are as important as their bottom line. In fact, they know that
comprehend the full impact of their actions is a great their customers and their people create their bottom line. People
combination. When you have these factors going for you, both customers and associates are considered on an equal
investors will stand up and take notice. par with performance.
Ken Blanchard, Jim Ballard and Fred Finch
Customer Mania! - Page 3

2. Find out what would make the customer experience even

Step #2 Treat your customers the right way
better by asking them what they want. Customers dont really
know whats possible, so you may have to ask them a leading
question which cannot be answered with a simple yes or
Instead of viewing customers as an unwanted distraction, all
no. Be genuinely interested in the ideas customers come
your organizations energy needs to be focused on creating a
up with, even if those ideas turn out to be of little value on
Customer Mania culture. Dont try and create satisfied
further reflection. Dont be defensive. Listen to what they
customers. Instead, your aim should be to turn customers into
have to say. With luck, there may be a spark of a new idea
raving fans. Put together a heritage library of stories of people
somewhere in there that can be picked up on and utilized.
who went the extra mile to create customers who want to brag
about what you do to others. Never forget the customer writes 3. Live your customer service vision by putting your customer
everyones paycheck, and is the reason for your existence. Treat contact people at the top of your organizations hierarchy, not
them accordingly. at the bottom. This is the implementation phase where you
equip your people with everything they need so they will
deliver what you visualized. For this to happen, your
To turn your customers into raving fans, you cant just announce customer contact people must have the power to respond to
thats what you want to do. Rather, you have to plan specific the customers requirements rather than being compelled to
ways to make it happen. You have to prepare everything thats follow the organizations rule, policies and procedures. In
required for the customer to have a great experience when they effect, doing this gives the frontline people permission to use
do business with you. their brains and become customer maniacs.
The key to turning customers into raving fans is to focus on the Creating raving fans of your customers doesnt happen by
moments of truth when customers come into contact with your accident. It is the result of deliberate actions on your
business or your people. This concept was first suggested by organizations part, combined with sufficient forethought and
Jan Carlzon when he was president of the Scandinavian Airlines empowerment.
Horst Schulze, one of the founders of the Ritz-Carlton Hotels,
A Moment of Truth is anytime a customer comes in contact with retired a few years ago as president and CEO. During Horsts
anyone in our organization in a way that they can get an reign, after orientation and extensive training, every employee
impression. How do we answer the phone? How do we check was given a $2,000 discretionary fund that they could use to
people in? How do we greet them on our planes? How do we solve a customer problem without checking with anyone. They
interact with them during flights? How do we handle baggage didnt even have to tell their boss. Horst loved to collect stories
claim? What happens when a problem occurs? about people really using this empowerment to make a
Jan Carlzon difference. One of my favorites is about a businessman who was
Actively attempting to turn customers into raving fans is a three staying at one of the Ritz-Carlton properties in Atlanta. That day
step process: he had to fly from Atlanta to Los Angeles and then from Los
Angeles to Hawaii, because the next day at one oclock he was
making a major speech to his international company. He was a
Creating raving fans little disorganized as he was leaving. On the way to the airport he
discovered that hed left behind his laptop computer, which
contained all the Power Points he needed for his presentation.
1 2 3 He tried to change flights but couldnt. So he called the
Ritz-Carlton and said, This is the room I was in, this is where my
Determine what Listen to what Put customer contact computer was. Have Housekeeping get it and overnight it to me.
customers feel customers want people at the top They have to guarantee delivery by ten oclock tomorrow
morning, because I need it for my one oclock speech. The next
day Schulze was wandering around the hotel, as he often did.
1. Determine what exactly you want customers to feel and When he got to Housekeeping he said, Wheres Mary? Her
experience when they do business with you. Develop a vivid coworkers said, Shes in Hawaii. Horst said, Hawaii? Whats
image of the kind of experience you hope customers will she doing in Hawaii? He was told, A guest left a computer in his
have. Go through and analyze all your moments of truth and room and he needs it for a speech today at one oclock and
decide in advance how you want each to play out. To do this Mary doesnt trust overnight carrier services anymore. Now you
effectively, youll need to walk in your customers shoes and might think that Mary went for a vacation, but she came back on
see things from that perspective. For example, a service the next plane. And what do you think was waiting for her? A
station owner in the 1970s realized customers dont buy gas letter of commendation from Horst and high fives around the
because they want to but because they have to. Therefore, hotel. If you create an environment where the customers rule and
he made it possible for the customer to get in and out as your people can use their brains to take care of customer needs,
quickly as possible. He even set up teams of service station stories like this become commonplace, even legendary.
attendants to race out to the car and pump the gas, check the Ken Blanchard, Jim Ballard and Fred Finch
oil and clean the windshield as if it was a pit stop during the
Indianapolis 500. Customers loved the service concept, and When customers are upset, all they want is to be heard. In fact,
soon the business grew rapidly through word-of-mouth research has shown that if you listen to a complaining customer
endorsements. Word of this got around and a well-known in a non-defensive, attentive way and then ask, Is there any way
television station sent a crew in to film what was going on, we could win back your loyalty? Eight times out of ten the
generating a huge amount of publicity. customer will say, You already have. You listened to me.
Ken Blanchard, Jim Ballard and Fred Finch
Customer Mania! - Page 4

2. Once youve identified the right people, you then want to get
Step #3 Treat your people the right way
them off to a good start. The way you do that is by providing
appropriate training and development. Even people with a
high level of competence will need ongoing training because
Never talk about your people as being hired hands. Nor should
the marketplace is changing constantly and new skills will be
you ever even contemplate getting rid of people during tough
economic times. Rather you should acknowledge that without
enthused and motivated people, you have nothing. Its A new employee orientation program is a must-have. For
impossible to treat your people poorly and then expect them to example, Disney theme parks provide a two-day Traditions
create raving fans of your customers. Instead, you need to Program which teaches new employees the legacy of Walt
empower your people and encourage them to think and act like Disney and the companys four key operational values.
business owners. Never lose sight of the fact that when your Some people who go through this program decide they really
people leave work at the end of each day, so does your entire dont want to work at a Disney theme park. Its far better to get
business operation. them to make this decision earlier rather than later.
3. Performance management means you keep employees
focused on achieving the right targets and working towards
If you treat your own people like winners, they will treat your
their goals. Many organizations ignore this, and just hope
customers as if theyre the most important people in the world.
their employees will develop into high performers on their
Thats the key to creating raving fans who will want to do
own initiative.
business with you again and again.
A well developed performance management system will
To turn your employees into customer maniacs, you have to
have three different parts:
organize and integrate the four key functions of human resource
departments: n Performance planning employees will be provided with
the tools they need to achieve the specified goals and
Recruit and hire the objectives. T his will usually involve t wo-way
1 communication between the employee and their manager
right people
to determine appropriate goals.
Train and develop so n Performance monitoring and feedback employees are
2 given specifics about how well theyre doing. Managers
people get the right start
Treating work closely with employees to praise progress, redirect
Employees Well inappropriate performance and decide on what kind of
Manage performance and support is needed to further enhance the employees
provide the right help performance.
n Performance evaluation where employees and
4 Give people opportunities managers sit down and formally evaluate the
to grow and advance performance of the employee over an extended period of
1. Recruiting and hiring is important. If you get the right people Typically, organizations devote the bulk of their time to
on your team to start with, everything else becomes much developing formal performance evaluation systems. The
easier. In essence, what you need to do is find people who only problem is many of these systems measure things that
have the competence and the character traits your nobody knows how to evaluate systematically. Its not
organization needs. Competence means you hire people unusual for these systems to attempt to gauge employee
who already have the skills and experience needed, or they initiative, willingness to take responsibility or even
have the potential to develop those skills given the right promotability. Since these terms are rather arbitrary, its
training and development. impossible to determine systematically how people are
Character means to look for people who will be good citizens actually doing in these areas.
within your corporate culture. That is: Generally speaking, organizations need to devote more time
n They will get enthused about your organizations vision and effort to performance monitoring and feedback. It is in
and values. the day-to-day observing and monitoring of performance that
n They will be sufficiently self-confident to serve others coaching really comes alive. As people are praised for what
without getting carried away and assuming they are the they do right, they feel motivated to do more of the same in
center of the universe. the future. Its important also that there be no surprises in
this. Your employees should know how they will be evaluated
n They will enjoy being of service to others and helping and what they need to do to earn a high score. If they do what
people. you want, they should be given a high score. This is an area
n They will like being part of a highly motivated team. where you dont want a forced distribution where a certain
If you have to choose between hiring people with percentage of your people are given a low score just to fit
competence or people with character, hire for character first some type of distribution curve. Instead, you want to create
and then train for competence. Its very difficult if not conditions where everyone gets an A, and where every
impossible to train people for character. Find people who manager is committed to doing whatever is needed to ensure
want to align themselves with the results you want and the all his or her people get an A on their performance evaluation.
methods your organization wants to use to achieve those Achieve that and your performance management system will
results. generate customer maniacs who live to turn your customers
into raving fans.
Customer Mania! - Page 5

4. Career planning is also an important factor in turning 3. Training To state the obvious ongoing training must be
employees into customer maniacs. Once your people provided in order for your company to become a learning
become experts in their jobs, they will start to look for new organization. Initial orientation training is vital. So too is
challenges and additional responsibilities. Your organization ongoing training over an extended period. This is how you
needs to provide these so your people dont look elsewhere. keep your people motivated and focused. When people fall
Ideally, new opportunities should open up as soon as: short, its either because they Cant do or Wont do. On job
People become very good at their present jobs. training addresses all Cant do problems.
They have trained someone else who can take their place. 4. Feedback Feedback is the breakfast of champions. The
The ideal is for everyone to succeed, rather than setting an more immediate the feedback is, the greater the motivational
arbitrary distribution curve where a set percentage of impact it will have. Do everything you can to link your
employees excel, another percentage are average organizations results with what your people are doing as
performers and a third arbitrary percentage are fired. You directly as possible.
want to create an environment where everyone is supporting 5. Recognition Rewarding peoples performance over time
each other in working towards your organizations goals and reinforces their motivation to keep going. If you also link your
objectives. This may sound idealistic, but it is achievable if reward system closely with your compensation and
you use career planning astutely. When people are in the promotion framework, the impact is magnified. Recognition
wrong spots for their strengths, they need to be repositioned keeps your people on track and moving forward.
so there is a better fit between what the organization needs To build a recognition culture, differentiate between the two
and what each person has to offer. types of recognition that you should provide:
Dont fall into the trap of thinking opportunities to advance n Day-to-day monitoring of performance and providing
careers must be limited just to the very elite performers. Its immediate feedback is one form of recognition. In this
not true that only a small percentage of people should be able area, you want your managers to catch people doing
to advance their careers with your organization. If you have things right and reinforce that rather than coming down on
good people working for you, harness their skills to grow the people hard when they do things wrong. The idea of
business. Expand your vision and grow on the strength of accentuating the positive requires that you focus on what
their creativity and enthusiasm rather than forcing good people did right and highlight that rather than chewing
people to go elsewhere for the business challenges they them out when mistakes happen. Keep in mind that
require. sometimes youve got to praise progress, even if the end
Note that good businesses dont leave things to chance. They result isnt quite where you want it to be yet. Deserved
dont operate randomly in the hope that customers will turn into praise builds relationships and encourages employees to
raving fans and employees will morph into customer maniacs all keep working hard. When someone goes the extra mile in
on their own. Instead, they put a performance management order to create a raving fan, recognize those efforts as
system in place which will make these things happen. soon as possible.
There are five key elements which will make up an effective n The second form of recognition is as a celebration of
performance management system: performance over time. Most people love being
acknowledged for their long-term contribution to the
1 Accountability businesss success. Annual awards banquets and other
special occasions where high performers are
2 Data / Information acknowledged are great. If possible, you should
Performance recognize both your top performers and also all those who
Management 3 Training live your organizations values consistently.
4 Feedback Leadership that emphasizes judgement, criticism, and
evaluation is a relic of the past. Great leadership today is about
5 Recognition treating people the right way by providing the support and
encouragement they need to be their best. When you treat your
people like winners, they treat your customers as if theyre the
1. Accountability All good performance starts with clear goals most important people in the world. Thats what creates raving
being articulated and understood. Until each person in the fans and gets your cash register going ca-ching.
organization knows what he or she will be held accountable Ken Blanchard, Jim Ballard and Fred Finch
for achieving, there will be confusion and wasted effort.
You have three choices when you hire people. One, you can
People need to know what they are being asked to do. The
hire a winner, somebody who already has experience in what
clearer each goal is, the greater the level of accountability
youre asking them to do. What you need to do with them is be
you can demand.
clear on their goals and objectives, and then let them run with the
2. Data / Information Once people know what good ball. The second choice you have is to hire a potential winner.
performance looks like, they need up-to-date information That is somebody who, with appropriate training and coaching,
about how they measure up. If this data can be made you think you can develop into a high performer. The third choice
available as rapidly as possible, people can self-monitor their is prayer. Unfortunately a lot of organizations hire people, then
own performance rather than requiring intensive give them some haphazard training and pray that the person
management. To manage something or even to recognize hired will become a winner. Great organizations dont leave that
when good progress is being made, accurate, detailed and to chance.
timely information is a must. Ken Blanchard, Jim Ballard and Fred Finch
Customer Mania! - Page 6

You take the joy of the doing and deciding away, you take the joy
Step #4 Have the right kind of leadership
of the job away.
Larry Bossidy, former CEO, Honeywell
Most leaders like to take all the credit when things go well and Character is following through on a good decision after the
apportion blame elsewhere whenever things are going poorly. excitement of making the decision has passed.
This is the opposite mind-set to what you want. Instead, you Hyrum Smith, founder , Franklin-Quest
should acknowledge that you as a leader are only as good as the
people you work with. Instead of viewing yourself at the top of the Why is customer focus so important? Because whether youre
heap, move mentally to the bottom of the hierarchy where you selling pizzas or professional services, your business is not
can act as a cheerleader and provide support. Replace an about you. Its about the people you serve. I say Im always
accumulation mind-set with a generosity mind-set. Focus more looking for companies that are trying to do it right because
on serving and less on accumulation and above all, do building a company is a continuous journey. There is no final
everything you can to make your organizations people destination.
successful. Never lose sight of the fact that if your people win, Ken Blanchard, Jim Ballard and Fred Finch
your organization wins.
Many people think building a customer-focused company along
the line of Yum!s would be difficult and fraught with effort. Thats
In the final analysis, leadership has two key aspects: because theyre still thinking of leadership as pushing and
efforting trying to get people to do things. When results drive
The roles of leaders people, rather than the other way around, you will get that strain.
Everything will be an effort. But putting results first is backward.
Organizations and leaders who emphasize results at the
expense of people are simply not riding the horse in the direction
1 2 it is going. Once you turn that around, the efforting goes away.
Youre operating in a way that restores energy rather than
To provide an organization To practice good depleting it. Its true that we found very hard working people at
with vision and direction servant-leadership Yum!, but they didnt strike us as being tired or acting beat-up.
Instead, they were passionate about what they were doing.
When you are doing what you love, you never work a day in your
1. Leaders should be encouraging their people to bring their life. Companies like Yum! defy the laws of physics, creating a
brains to work each day. When it comes to making sound perpetual-motion machine where the work feeds the energy,
decisions, clear thinking should supercede rules and which feeds the work, which feeds the energy.
regulations all the time. A good leader should have the Ken Blanchard, Jim Ballard and Fred Finch
attitude his or her job is to reorganize the company at a
moments notice to meet the customers requirements. This Too many leaders today think their success depends on how
is only feasible if the organization has a vision of creating much wealth they have accumulated, the amount of recognition
raving fans rather than forcing customers to comply with the they have received, and the power and status they have. There
systems arbitrarily put in place. is nothing inherently wrong with any of those things, as long as
2. Servant leaders have their egos in check. They realize you dont identify who you are as those things.
leadership is not really about themselves but its about Ken Blanchard, Jim Ballard and Fred Finch
serving the customer well. Servant leaders understand their I have found over the years that when we focus only on success,
positions are effectively on loan from all the stakeholders in we will never reach significance. Thats the problem with
the organization, and that their key role is to help everyone self-serving leaders they never get out of their own way. On the
working for the organization succeed. A good servant leader other hand, by focusing on significance generosity, service,
inverts the hierarchy and moves to the bottom. He or she acts and loving relationships youll be amazed how much success
as a cheerleader, supporter and encourager for the front-line will come your way. Take Mother Teresa as an example. She
people who have the responsibility to create raving fans. could have cared less about accumulation of wealth, recognition,
Servant leaders dont believe their power comes from their and status. Her whole life was focused on significance. And yet
position, but work hard to get everyone else in the what happened? Success came her way. Her ministry received
organization to like them and respect them and agree to do tremendous financial backing, she was recognized all over the
what they suggest. Good servant leaders arent concerned world and given the highest status wherever she went. She was
about accumulating recognition. They enshrine corporate the ultimate servant leader. If you focus on significance first, your
success as the end goal of their efforts. emphasis will be on people. Through that emphasis, success
People with humility dont think less of themselves, they just and results will follow.
think about themselves less. Ken Blanchard, Jim Ballard and Fred Finch
Ken Blanchard, Jim Ballard and Fred Finch These days, nobody has to convince anybody that the customer
People with humility dont deny their power, but they recognize is king. Competition is everywhere. People are realizing their
that it passes through them, not from them. organizations will go nowhere without the loyalty and
Fred Smith, author commitment of their customers. Companies are motivated to
change when they discover the new rule: If you dont take care of
Of the true leader the people will say, We did it ourselves. your customers, somebody else will.
Lao Tzu Ken Blanchard, Jim Ballard and Fred Finch
Customer Mania! - Page 7

Case Study Yum! Brands Yum!s How We Work Together Leadership Principles

Customer Mania
Background 1 We not only listen and respond to the voice
In 1997, KFC (originally Kentucky Fried Chicken), Taco Bell and of the customer, we are obsessed to go the
Pizza Hut were spun off from PepsiCo to form Tricon. When extra mile to make our customer happy.
Long John Silvers and A&W All American Food restaurant were
added in 2002, the company became the largest restaurant Belief in People
company in the world with 840,000 employees at 33,000 2 We believe in people, trust in positive intentions,
restaurants in more than 100 countries. It was at this time the encourage ideas from everyone and actively
company changed its name to Yum! Brands. develop a workforce that is diverse.
David Novak was appointed president of Tricon when it was spun Recognition
off and continued on as president of Yum! Brands. The company 3 We find reasons to celebrate the achievements
was $4.7 billion in debt and generated a return on invested of others and have fun doing it.
capital of only about 8- to 9-percent a year. Novak decided it was
time to turn Yum! Brands into a customer-focused company the Coaching and support
right way. 4
We coach and support each other.
Weve got a real opportunity here. How many leaders and teams
have the chance to take well-known brands some that are Accountability
celebrating their fiftieth anniversary and start a new company? We do what we say, we act like owners.
If we build it the right way, we can create the company of the
century. Executional Excellence
David Novak 6 We beat year-ago results by continuously improving
and innovating. We follow through with intensity.
Step 1 Set your sights on the right target
Right from the outset of Yum!, they set their sights high on Positive Energy
achieving the right target. Yum! Brands has these goals: 7 We execute with energy and intensity we hate
bureaucracy and all its associated nonsense
The Yum! Dynasty Model
Our Passion We practice team together, team apart after conflict.
1 Customer Mania...act as one system to put a
Yum! on customer faces worldwide
In terms of clarity, these people know who they are, where
Formula For Success theyre going and what will guide their journey. What keeps them
2 People capability first...satisfied customers from perfection is that they havent driven the vision down
and profitability follow through the roofs yet to the restaurant level. So they still have
some work to do in making the vision universally understood and
How We Lead acted upon where it really counts at the restaurant and with
1. Be a customer maniac their customers.
3 2. Know & drive business Ken Blanchard, Jim Ballard and Fred Finch
3. Build, inspire & align
Step 2 Treat your customers the right way
How We Win Yum! did some research about what its customers wanted and
Be the best at providing customer branded came up with the C-H-A-M-P-S acronym:
restaurant choices and multi-branding great brands C Cleanliness
1. Run great restaurants H Hospitality
2. Differentiate our brands A Accuracy
3. Drive global expansion M Maintenance nice equipment and facilities
4. Use multi-branding P Product quality
5. Convert cash flow into high value S Speed with Service
The company then empowered its frontline people to deliver
How We Work Together CHAMPS to customers by:
5 We follow our How We Work Together leadership n Allowing employees to spend up to $10 each to respond to
principles and our Franchisee Partnership Pact customer issues on the spot.
n Setting up area coaches who are responsible for five to six
restaurants and regional coaches for up to 300 restaurants.
In essence, Yum! is aspiring to be a great company to work for, in
the ranks of the most admired companies in the world and a n Encouraging employees to solve problems on the spot rather
global leader in the restaurant business. These goals are big, than take it to their managers for instructions.
bright and inspiring. n Sharing stories of exceptional customer service.
Customer Mania! - Page 8

Step 3 Treat your people the right way n Every leader at Yum! is required to develop an award that
Yum! attempts to treat its own people like winners and generate will recognize desired behavior. As a result, the company
an ongoing supply of customer maniacs by: has an array of zany and creative awards including The
Floppy Chicken, The Mission Impossible Award, The
1. Recruiting and hiring
Chain of Champions Award, Pizza Hut Gold Award, The
n Most employers in the fast food industry take anyone they A-Team Award, The Way of the Paddle Award, The
can get because they have such a high turnover rate. CHAMPS 100 Club Award, The Radical Rooster Award,
Yum! makes a deliberate attempt to hire rigorously people The Golden Bell Award, The Bulldozer Award, The ANTZ
who will be a good fit with the culture. As a result, Yum!s Award, The Golden Wishbone Award, The Big Cheese
turnover is about 114-percent as opposed to the industry Award, The Golden Camel Award, and so on. These
average of 136-percent a year. Yum! has set a goal to get awards are given regularly to recognize employee
employee turnover to 50-percent or less by ensuring they contributions. Yum!s Restaurant Support Center has a
get the right people to start with. Walk of Champions with pictures of the award recipients.
2. Training and development 4. Providing opportunities for career advancement
n Company leaders, franchise owners and their key n Yum! actively promotes people from within its own ranks.
associates attend three-day training programs called
n The company provides extensive mentoring and
Taking People With You and Building the Yum! Dynasty.
coaching programs to provide people the training they
Both these programs are taught by the companys CEO
need to apply for positions of responsibility within the
and other senior managers. They talk about what it takes
to build a great company and best practices.
n Career management is handled one person at a time by
n Training for employees is centered around the
area managers, franchisees and senior leadership.
Developing Champions training program. This is a mix of
on-the-job coaching and classroom time. Employees are Step 4 Have the right kind of leadership
taught the customer mania mindset. This is also backed The Yum! approach to leadership can be summed up by the idea
up by courses taught at the Yum! University which cover the companys executives dont believe they have exclusive
the entire spectrum of business subjects. rights to great ideas. Instead, they have the mind-set that the
3. Managing employee performance frontline staff probably have better ideas than they do, and
therefore the way to move forward is by letting those ideas come
n Every employee is assigned a coach who sits down and
to the fore rather than trying to impose things from the top down.
sets goals at the beginning of the year. Employees meet
with their coach, identify their most important goals and In addition:
come up with a plan for achieving those goals. A midyear n Yum! leaders dont communicate with memos. They develop
360-degree evaluation is then carried out to look at teaching packages for senior management, and then leave it
progress and needs. to each leader to teach their people.
n Yum! believes strongly in the dictum that if you cant n Yum! leaders focus on doing the right thing rather than simply
measure it, you cant manage it. Accordingly, the whatever is most expedient at the moment.
company has a comprehensive system in place to coach, n The company has a combination of loosely and tightly
recognize and reward people. This is integrated with regulated systems in order to get the most from people. This
Yum!s CHAMPS operating measuring system. encourages vibrancy and innovation rather than mindless
(Cleanliness, Hospitality, Accuracy, Maintenance, adherence to set rules.
Product quality and Speed). The programs are:
n Yum! leaders live the servant leadership ideal with passion.
CHAMPSCheck a mystery shopper rates restaurants
They do everything they can to help their people be
CHAMPS Excellence Review coaching sessions
successful in achieving crystal clear goals and objectives.
Hot Line a customer service number for complaints
n Yum! also uses a Balanced Scorecard to provide overall Culture has to be leader led. This is something that cant be
assessments of its restaurants. In addition, all delegated. It has to be initiated by our very most senior leaders.
performance scores are openly shared and listed so Secondly, it has to be cascaded. You cant skip a level when
everyone in the organization knows how their peers are youre driving whats really important. Its got to be leader led and
performing. the leaders have to cascade the culture all the way to the person
n Yum!s compensation program emphasizes pay for that touches our customers.
performance. A percentage of every employees Irfan Mustafa, Yum! Middle East
compensation is based on bonuses which vary with actual Its a never-ending journey. You cant ever stop or let up on it.
performance. T he higher anyone goes in the The jobs never done. Youve got to continually look for ways and
organization, the bigger the percentage of the overall means to take it to the next level because there are a lot of people
compensation package is performance based. For senior who are either looking for it not to work or leaders who dont place
management, more than half of their compensation as much emphasis or focus on the culture. There are a lot of
packages are variable and performance based. people who say it cant be done, or dont want it to be done. But
n Yum! uses employee recognition programs to reduce youve got to believe. Leaders who believe in what theyre doing
turnover, build retention and ultimately to drive stay focused. They stay the course and go the distance.
performance. Peter Hearl, president, Pizza Hut

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