Take The CEO Challenge

21 Feb 2012

Companies have been lectured to ad nauseam to ‘listen to their customers’; rationale being that they will learn nuances about a variety of product issues and unmet needs that otherwise might not surface.  Others like Mark Cuban argue the opposite — don’t listen to your customers, under the belief that customers don’t really know what they want, and if you listen to them and build what they want, you might make some fatal mistakes.

Who’s right?

Certainly customer-centric market research has contributed immeasurably to new product design.  On the other hand, Mark Cuban has a point, classic market research may not be sufficient to uncover innovative products/services such as Facebook, the iPad and the Nest home thermostat.

We believe both approaches are missing the point and both are far too product myopic in their thinking.   Too many companies equate ‘innovation’ with ‘product innovation’ and thus fall into the ‘listen to your customers’ trap.

So reframe the question.  How many companies talk to existing customers in absence of some revenue transaction?  We call on customers when we are selling to them, we call on them to renew, perhaps we place a courtesy customer service call post transaction to see how we did and how we might improve, etc.  Companies often wheel out the CEO to close the big deal.

So what’s the CEO Challenge?  It’s a technique we developed a few years back that’s showing some remarkable results for our clients.  Simply put, we mandate our client CEO’s to call three current clients and two lost clients per week for four weeks straight.  Twenty calls total.  Each call is reasonably brief, limited to 30 minutes unless the person called would like to speak longer.  The CEO is not pitching a deal or following up on a complaint from a key customer.  These are random calls.  The CEO is listening — and importantly — listening outside of some revenue transaction.  The CEO is not calling ostensibly to sell a big deal, thank a customer for a recent order, try to convert/win a lost customer, etc.  The point of the CEO Challenge is twofold: (1) to pleasantly surprise your customers and prospects as well as engage them in a broad discussion about what they really think of your product and company, and (2) to sharpen the CEO skills of ‘active listening’.

Active listening?

Yes, CEO’s and C-level execs have very well honed frames of reference, biased judgments and other internal mental activities that frame how they ‘hear’ a customer or prospect.

Think of it this way.  In soccer penalty kicks, goalkeepers choose their action before they can clearly observe the kick direction. An analysis of 286 penalty kicks in top leagues and championships worldwide shows that given the probability distribution of kick direction, the optimal strategy for goalkeepers is to stay in the goal’s center. Goalkeepers, however, almost always jump right or left.  Norm theory: Comparing reality to its alternatives implies that a goal scored yields worse feelings for the goalkeeper following inaction (staying in the center) than following action (jumping), leading to a bias for action. The omission bias, a bias in favor of inaction, is reversed here because the norm here is reversed – to act rather than to choose inaction. The claim that jumping is the norm is supported by a second study, a survey conducted with 32 top professional goalkeepers. The seemingly biased decision making is particularly striking since the goalkeepers have huge incentives to make correct decisions, and it is a decision they encounter frequently.

So, a bias for action or active listening?

CEO’s that engage customers and prospects not with a bias for action but rather an active listening approach will most likely learn and amazing things about your products and services as seen through your customers and prospects eyes.

Try it … and be sure to report back to your Board what you learned.

Up and Right!

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