A Tribute to the Original Collaboration Evangelist

On the Monday before Thanksgiving [2008] my father, Cecil H. Underwood,  passed away.  The date was November 24th, nineteen days after his 86th birthday and twenty days after Barrack Obama was elected President.   My father was born two days before Election Day in 1922, elected the youngest Governor of West Virginia two days after he turned 34 and elected the state’s oldest Governor on his 74th birthday.  In my post, Why a Collaboration Evangelist, I wrote:

Perhaps it’s a “nature and nurture” thing, as I have always been a strong believer that teams of smart people with diverse backgrounds and points of view will always have a better chance of solving challenging problems and finding new opportunities to add value to any enterprise than the model where “one smart guy solves all the problems and makes all the decisions.”

From the nature side, I was born the day after my father was inaugurated as the 25th governor of the State of West Virginia at the age of 34.  One of the things he told me about that campaign was although they had only one paid staffer – his driver – the campaign was supported by 3000 volunteers. The campaign put all of their efforts into organizing and energizing their volunteer network to register and get supporters to the polls.  They spent the money they raised on the new technology of the day called TV advertising.  This strategy enabled him to become the first Republican governor in 25 years in a state where Democratic voters outnumbered Republicans   by 2.5 to 1.

The many papers around the world that carried the news of my father’s death described him as “a high school teacher who became a governor.”  While it is true that he started his career as a high school biology teacher and his last formal employment was as a Drinko Scholar at Marshall University, my father was always quietly teaching through his actions to those of us who had the good fortune to know and work with him. At his memorial service, I remembered my father by sharing some of the lessons he taught us by the way he lived and the way he led.  These included:

1. No obstacle is too high to overcome if you believe in yourself and are willing to work very hard to achieve your goals.

My father took on monumental challenges from the beginning of his career.  At the age of 22, he challenged a long standing incumbent to win the first of six terms to the State Legislature.  Twelve years later he was elected Governor.  But at the end of his first term he lost a race for the US Senate (at that time, Governors could not run for re-election) and over the next 36 years he ran unsuccessfully for Governor three times.

1956 Campaigning for Governor at 33 Years Old

1956 Campaigning for Governor at 33 Years Old

During this period, I remember thinking that maybe my father had “peaked too soon” at the age of 34, like an NBA team playing their best ball before the playoffs.   He showed me otherwise in 1996 when he was elected the State’s 32nd Governor.  During his second administration, more jobs were created, more roads were built and more school children and seniors were connected to the internet than during any other four year period in the history of West Virginia.

As I admired his work ethic and the successes of his second term, I thought he was the greatest role model for working hard and beating the odds that anyone could ever have.  But again I was wrong. Not wrong in the role model, but wrong in the act.

The most amazing thing I saw my father do was to come back from a paralyzing stroke he suffered in 2006 at the age of 83.  The entire left side of his body was paralyzed with the exception of his fingers, which he could move slightly if he wasn’t too tired.  At his discharge planning meeting a few months later, my sisters and I told Dad he needed to move to an assisted living facility to continue his rehabilitation.  He was none too happy with our proclamation and wanted to know what he had to do to live at home again. We told him he needed to be able to walk.

So, for the next three months, he did 5 hours of physical therapy a day – riding the stationary bike, lifting weights and doing anything else the PT staff at Charleston Gardens told him to do.  His efforts were rewarded as he indeed did walk again and was selected “Stroke Recovery Patient of the Year.” More importantly, he was able to return home for several years.

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Three I Leadership

During the time I was CEO of The Loyalty Group, we grew from three entrepreneurs in a Toronto hotel room to over 600 employees when we sold the business to Alliance Data System (NYSE: ADS) in 1998.  Throughout this period, I thought a lot about both leadership and how to help our people develop the requisite skills to advance as far as they wanted to in their careers.

Nothing gives me greater pleasure that seeing those who worked with me do extremely well.  Two great examples are John Scullion and Brian Sinclair.  In 1993, I had to use all of my selling skills to convince John to leave the high profile corporate travel business Ryder Travel and join a company whose balance sheet looked similar to some now defunct Wall Street firms.  John is now President and COO of Alliance Data Systems, with a market cap of several billion dollars.  Brian Sinclair, whose first job out of college was an AIR MILES analyst, is now the Managing Director of Nectar, the wildly successful coalition loyalty program in the UK that recently sold to Aeroplan for $700MM.

After we visited Brian at his London offices last summer, my 12 year old daughter Jordan remarked, “You gave him his first job and now he has a better job than you!”  Although I thought about reminding her that the flexibility of my firm enabled our father-daughter trip to London, my wiser side prevailed and I responded, “That’s right, and nothing could make me happier than seeing people I hired doing really well.  That means I hired great people and hopefully they learned a few things from working with me.”

One of the things I came to understand about leadership and developing executive talent became what I call the “Three I’s of Leadership.”  I realized to build a successful high growth company while delivering on our cultural goal of “doing what others consider the impossible, while treating people with respect and having fun along the way,” we needed leaders with the following skills:

  • Intellectual Leadership – Leaders who had both the raw brain power to identify opportunities and solve challenges and very deep skills in their specific areas of expertise.
  • Implementational Leadership – Leaders who were not just “consulting smart.” Executives who could actually stop thinking, developing models and drawing 2 x 2 matricies and “land the helicopter, get the troops in the field and make things happen”, to quote a former client.
  • Inspirational Leadership – Leaders who could get things done without making everyone who worked for them want to quit.

Over time, I found out two things about this model:

Three I Leadership can be, and usually is, a shared set of skills. Although no senior executive can have below threshold skills in any of the areas, many highly successful companies are lead by “Three I Leadership Teams.”  I first realized this through being involved in YPO (the Young President’s Organization) where I spent a lot of time with other Presidents of successful companies. My original belief was that successful CEO’s had to be “A” players in all three leadership skill sets, but I observed several who clearly were not what anyone would consider “motivate the troops inspirational” and others who were brilliant “idea machines,”  but needed someone to keep them from trying to implement every idea as soon as it burst into their heads.  All I observed were very smart, but not all would qualify for Mensa.

I soon realized that almost everyone had built a “Three I Team” around themselves by hiring direct reports that balanced and complimented their skill sets. There was the collaboration principle at work again.  Once I realized the importance of Three I Teams (and the stupidity of expecting every senior executive to be naturally gifted at all three), I started using the model to help my direct reports work on their weakest areas and to make sure we had Three I Teams leading all of our major groups and strategic initiatives.

I later began using the Three I model in recruiting and would ask candidates to distribute 100 points across the Three I’s to indicate their leadership strengths and weaknesses. One of the funniest reactions I received to this question came from an executive who had worked at American Express during the 90’s when Harvey Golub was CEO.  He responded something like, “That’s a great model.  Harvey is 60 intellectual, 40 implementational and 0 inspirational.” Then he became even more excited and said, “No, that’s not correct.  He is 60 intellectual, 60 implementational and negative 20 inspirational.”  Although the candidate was clearly exaggerating in jest, he was making my point exactly as Ken Chenault was Gulob’s number two at the time. I had the good fortune to spend time with Ken in the late 90’s as he had to personally approve American Express’s deal to  become an AIR MILES Sponsor.  Then and now, there may not be a better example of a “High I Inspirational” leader than Ken.

The model can apply to the leadership teams of organizations large and small. I recently thought about this model and how it applies to little league baseball coaches.  A coach needs to know the game of baseball, the complex rules, how to catch, hit, run and steal bases, etc.  Knowing how to play baseball is necessary, but insufficient. Someone on the coaching staff needs to know how to teach young kids to play baseball – how to learn the game and improve their skills. What drills are most effective in practice; how to spot a batting stance off balance or throwing motion without follow-through and how to make the subtle changes to correct these errors.  Finally, as all sports are partly mind games and baseball can be incredibly stressful for young athletes, at least one of the coaches has to be able to keep the kids fired up and have a vast vocabulary of positive things to say no matter what happens at the plate!

If this model makes sense to you, try it inside your own organization.  If it applies, consider building it into your professional development systems and recruiting strategies.  Collaborate by letting me know if it worked and what you have done to build upon it.

 

Note:  This post was originally written on November 11, 2008. 

The 4 R’s

When two former Bain consultants and one recently minted Harvard MBA started AIR MILES Canada, we knew a lot about the economics of customer loyalty and how to quickly understand and model the profit drivers of almost any business. We also knew almost nothing about database marketing other than a few buzzwords one of us picked up from a girlfriend who had launched several magazines.

One thing we felt we did know for certain was that if we could build a broad based coalition of leading Canadian companies who committed to market the program to their customers, we would have the opportunity to create and utilize one of the world’s best marketing databases. All of our friends got that as well; and every one of them thought we would “make a ton of money selling the database.” What they didn’t get was our founding principal of not selling the “list” to businesses outside of the Sponsor coalition (i.e. the companies who paid for the points). We believed we could create the future of database marketing (although we didn’t have a clue as to how we were going to do that), but only if we developed a relationship with our Collectors built on trust.

Before long, we began to talk about the 4 R’s of Relationship Marketing and sketching this diagram on napkins and tablecloths around Toronto, Montreal and Calgary:

The 4 R's

We described our thinking about building relationships like this:

  1. If we recognized that when people showed their AIR MILES card at a retail Sponsor we were rewarding them for both their loyalty to the Sponsor’s business and the fact that they were sharing information with our company (by purchasing the good or service and identifying themselves as an AIR MILES Collector, they were telling us when and where they made the purchase, if they were responding to a targeted offer or coalition promotion, etc.), and…
  2. If we respected the information Collectors shared with us – including demographic and shopping intention information millions shared with us through surveys in return for bonus miles – and didn’t sell or give that information to anyone outside of the AIR MILES coalition (and not even other Sponsors if so requested), and…
  3. If we used the information to present relevant offers to Collectors based on their shopping habits, needs and interests (if a Collector was turned down for an AIR MILES Mastercard, we wouldn’t send them additional bonus offers to apply for one; if we knew there were only guys living in a household, we wouldn’t send them offers for a woman’s magazines; no car, no Goodyear offers, etc.), then…
  4. We would create higher open, read and respond rates to both our basic offers as well as our targeted specific offers and bonuses, which would – in turn – give us the opportunity to continue to reward both loyalty and the sharing of information.

If you think about this simple model, it doesn’t just apply to relationship marketing, but also to basic human relationships as well. If you begin to develop a relationship with someone and share something personal and confidential with them, that relationship will be short lived if they share it with others or otherwise don’t respect your confidence.  We tend to develop relationships with people we have at least something in common with – some point of relevance – be it kids, snowboarding or web 2.0. If these 2 elements are present, the potential for a relationship exits; without them, one probably won’t develop.

The 4R’sl, along with a lot of other parts of the AIR MILES model, appears to have worked fairly well as the program now has over 70% (that’s 9 million) Canadian households as members. More pointedly, while I was CEO, we had open rates for our (snail mail) direct marketing programs of over 70%. Although AIR MILES doesn’t share specific data on email response rates, my understanding is the company still enjoys high open and click through rates for their email marketing programs.

Which brings me to Facebook, Amazon and Eons. Like Jeremiah and many others, I was amused to be served up a banner ad on Facebook last spring for “Thirty Plus and Single” when on the same page I clearly listed my status as “married.”

Facebook was clearly not getting the relevance part and I don’t need to go into all of the respect angles violated by Beacon. Business Week had a good article on the social networking sites’ challenges with developing advertising.

Like many, I use a separate email account for marketing emails. Last week, as I was cleaning them out, I found 2 other examples of online businesses not getting the 4 R’s from Eons and Amazon.

John Della Volpe, the founder of SocialSphere, always thought one of the challenges facing Eons was that many people over 50 aren’t really excited about standing up and telling everyone, or joining a social network for those over the hill. Do people really like to say, “Hey, I’m old?” Partially because I’m in the business, partially because I know Jeff through our work with Year Up, and partially because I was eligible (even before they lowered the age threshold) I joined Eons. But I never really got the value proposition. At least AARP’s mailings tell you right up front about discounts and other offers they bring. Not terribly hip, but getting a deal on anything will always be relevant to me.

So imagine how jazzed I was to open an email only to be greeted with an offer to “get pictures of your grandkids” or something like that. Surely, they have some way of knowing I am probably a couple of decades away from being a granddad. Not relevant and not the kind of email someone like me would open again.

Then Amazon, who has many features I dearly love and admire (Amazon prime may be the world’s best loyalty program – more on that in a future post) sends me an email with a recommendation to buy a case for the flip video I recently purchased.

So what’s wrong with that? Take a look at the user ratings – 2 STARS! This one stood out to me because I had already checked out the product and knew it was a dud. Amazon served up the “people who bought this product also looked at these” content when I was purchasing the flip. After seeing the 2 stars and reading a couple of reviews (e.g. “This pouch is really cheaply made, hard to use, and not worth the money at all”), I didn’t bite.

Back to our core principle – building a relationship requires a foundation of trust. As John Lederer, the longtime leader of Loblaws supermarkets often said, “the consumer has given us their trust to select products for them to be available in our stores.” Although Amazon sells many products through third party retailers and clearly lets you know they are not being sold by amazon.com, it’s one thing to sell products you have little control over and another thing completely to send an email to a highly active customer recommending a product other customers have given a 2-star rating. I have come to trust that Amazon will offer great products and extraordinary service. I have been less enamored with their recommendations and – given this latest example – am even less likely to look at their recommendations or open their emails.

The more time I spend in this space, the more I realize that on-line community builders and advertisers can learn a lot from those of us that also spent time in the traditional direct mail and loyalty space. In true web 2.0 fashion, combining the best of both models will create the most effective strategies.