6 Go There – The Chocolate Conversation: Lead Bittersweet Change; Transform Your Business

Go There

We’ve all heard the expression, “Don’t go there!” It crops up in movies and on TV, and, if you have kids, as I do, it’s common in their speech. I hear it all the time as I listen in on conversations: “Oh, God! What if . . . ?” says one woman at the table next to me at lunch. “Well, don’t even go there . . . !” her companion replies.

What do people mean when they say, “Don’t go there”? It can mean anything from “I don’t want to talk about it” to “That’s out of bounds.” Even when people use the phrase in a casual or joking way, they’re saying the conversation has to move on to another subject—the topic is just too risky. They’re warning you that it’s best not to know, or it’s something not to even consider.

What people mean when they say “Don’t go there” is: there is a background conversation that is off limits, either because it’s too scary or it’s too emotional or, in business, it’s politically volatile to bring out into the open.

I don’t know about you, but when someone tells me not to go there, I’m packed and ready to do just that. When I hear that expression, I want to say, “Please don’t tell me where I can’t go—I’m a big girl and I can handle it!” Once I know there’s an “undiscussable” out there, I have to find out what it is—and why we’re not supposed to be talking about it.

I’m not a fan of background conversations that never get addressed. Too often, those very discussions, if examined and defused, would open a clear space to address issues that otherwise stay unresolved. I can think of many “undiscussables” in our history that were harmful—even life-threatening—precisely because people didn’t want to “go there.” In business, I see this often; without fail, it is those background conversations that block the forward movement of the company.

Companies avoid “going there” more frequently than you would think. Topics that can’t be discussed become the “eight-hundred-pound gorilla” on the meeting table whenever important company policy needs to be hammered out and new directives created, blocking open initiative and new avenues of exploration. Everyone knows this “gorilla” is sitting there, and yet people do everything they can to avoid mentioning it.

A number of years ago I worked with a publicly traded consumer products company at which a large ownership stake was controlled by a single extended family. The gorilla on this company’s conference table was executive succession. Talent and performance would take executives only so far—once they made it to the level just below the CEO’s senior team, they could go no further in the company. The CEO was a member of the controlling family, as were a couple of the board members. The CEO was finally forced to acknowledge the issue when executives with market-making talent kept leaving the company after they’d reached a certain level. The company couldn’t sustain the brain drain.

Once I realized that executive succession—or the lack of it for everyone but the family—was the issue blocking vitality and growth at this company, I had some hard conversations with the CEO. I pointed out that losing important talent was the cause of the company’s eroding position against more innovative competitors. It prompted him to have a conversation with other members of the controlling family, and they agreed to open the issue up for discussion.

So, how did the CEO get the gorilla off the table with the disenfranchised teams in the organization? He brought a large, stuffed gorilla—about three-and-a-half-feet tall, sitting down—and put it in the middle of the table during a meeting with business unit senior managers.

The meeting kicked off in normal fashion, with no mention of the unusual centerpiece. Incredibly, he got about halfway through the agenda before one participant said to the CEO, “Pat, I can’t see you over this thing. Why is there a big, stuffed gorilla on the table?”

“I’m glad you asked, Cindy,” the CEO said. “That’s all the stuff—like executive succession—that we really need to talk about, and that never finds its way onto the agenda. It’s been here so long, I figured we could just stick the gorilla there as a placeholder. We can even name it if you’d like. Of course, we can take the gorilla off the table if we can talk about things like succession.”

The meeting was unlike any other the executives could remember. The discussion stimulated a huge outpouring of ideas about how to tackle the problem. The story made the rounds through the company in a few short hours, and the buzz was all good. People had been thinking about this issue for years. They needed a way to get past the block, and the CEO had to be open to a new possibility for his company. The stuffed gorilla signaled that the company was ready to address and solve previously undiscussable topics.

This company now keeps a supply of small stuffed gorillas on hand, and people point to a gorilla when conversations are getting too guarded. Pulling out a gorilla and setting it on the table is the sign that honest dealing with issues is getting off track. This is akin to saying, “Hold on, we’re having a Chocolate Conversation.” I like the use of metaphors to open up conversations like this. They are powerful yet lighthearted ways to help you “go there.”

Earlier, we talked about what people mean when they say, “Don’t go there.” They are letting you know that you are about to trigger something that causes them anxiety, anger, or some other profound discomfort. As a leader, you may find that you are the only one who can open up the conversation others are afraid to have. Let’s take a look at what this means.

One of my former clients was a stickler for detail. He prided himself on being able to spot a typo in a document. He could tell the difference between an en dash and an em dash at one hundred paces. In other words, he could tell the difference between this – and this—. And that became what he focused on.

I appreciated that he had a sharp eye for detail, but he was hyperfocused on minutiae every time he had something to discuss, and it kept derailing conversations. These small typos, invisible to others, undermined his confidence in the document as a whole. The content of the document—in this case, a report on due diligence preceding a $500 million acquisition—became secondary to this guy’s visual trigger.

People have verbal and visual triggers. Understanding them is the first step in being able to uncover an undiscussable topic and move things forward.

For my detail-obsessed client, the focus on typographical minutiae turned out to be a proxy for unease about being called out on figures. It took a hard conversation with him to get to his underlying concern: he felt that if his team had not properly proofed their draft before showing it to him, the numbers in the draft might also be inaccurate. In other words, my client did not trust the accuracy of the facts and figures in the document because he saw the typos as careless mistakes and applied “carelessness” to the entire document.

This client’s internal bar for accuracy was set so high that he didn’t want to let anything out of his hands. When my partner and I interviewed his team, they told us they were fearful about bringing anything to him in draft form, as he could never get past the first typo. We suggested having an open dialogue about this issue, and they reticently agreed. They were afraid to “go there.”

I asked my client if he would be willing to open the discussion with his team, assuring him that this was the only way to solve this gridlock and get the better outcome he desired. He asked me to facilitate the dialogue. I often find that an objective third party can expedite the discussion and keep it on track toward a solution.

When this executive was able to get his concern out in the open, the team understood why he was being so “picky.” They reassured him that the facts and figures in the document were well researched and accurate. The typos were not an indication of sloppy staff work.

Once they all agreed on standards for a draft, they were able to move beyond the impasse. They created a standard that all could live with: accuracy on the facts and “roughly right” on the punctuation. This allowed his team to pull in all that could be known in a timely manner and get the information down on paper without having to sacrifice content for style. I told him, “Once you understand the substance of the content, it can be proofed and returned to you for a final edit.” This guy’s “roughly right” was still exacting, but an agreement on a new standard allowed him to get through a draft review without being triggered, and then derailed, by minutiae.

The takeaway from this example is: be willing to identify the triggers that get in the way, openly discuss them, and make it okay for you and your people to go there so all can advance the work.

Another key point is, don’t lose sight of what you stand for. One of my clients early on was a manufacturing company that was eager to improve the quality of its products. It had established a series of metrics around ten different quality points. At the same time, one of the most important components of the company’s reward system involved the number of units shipped within a few days of order, and that number was measured each month. Everyone stayed focused on that monthly speed-to-ship figure, because it came up on reviews every quarter.

The situation crossed into “don’t go there” territory when the quality points started to become mutually exclusive with a quick speed-to-ship number. Sometimes, quality steps were skipped in favor of that shipping metric, but no one wanted to walk into an ops review and defend a lower speed-to-ship number because of quality. As a result, what the company stood for—quality—started to slip.

Every manager I spoke to about a lower speed-to-ship number—in order to regain the quality levels the CEO said he was committed to—was instantly out of the conversation. The assumption that the company would not tolerate this made even hearing about it taboo. In this instance, the trigger was coming from, and being reinforced by, the company.

Fixing the trigger meant changing metrics in a very public way, so the speed-to-ship trigger lost its potency. I pointed out to the CEO that it was important to identify what he and the company were committed to and then get his team on board with that. It was clear he wanted both quality and an excellent speed-to-ship number, but the message to his employees was weighted in favor of the shipping number because that’s what they were rated on. By restating the importance of both quality standards and shipping standards, and creating review metrics for both, the CEO was able to bring the focus back in balance. Expectations on both metrics were clear and out in the open. Everyone could now get back on track.

In this case, we had to get both sides to agree to discuss something neither wanted to address. The senior team was uncomfortable about changing the metric because it meant explaining to the CEO what was going on and how he and they had inadvertently created the problem. The CEO didn’t realize that this was the core of the problem—he just knew quality was down, and that was unacceptable to him.

This situation required what I refer to as the artful conversation.

The artful conversation has three steps:

Have the conversation about the conversation: “Larry we want to bring something to your attention that is negatively impacting our quality standards. Without intending to, we are contributing to the problem.” This is where you create a context for the topic you want to address.

Get buy-in to continue: “Can I give you the facts?”

State just the facts: “Our reward system compensates people for low speed-to-ship numbers. In our attempt to significantly improve this metric, we’re unintentionally encouraging the teams to achieve it at the expense of the other nine quality standards.”

At this point, if you have a solution, say so: “We have a recommendation for resolving this issue and would like your input. Is this a good time to discuss it?” Or simply ask for an opportunity to discuss the issue further.

Remember: leadership happens in the conversation. Preparing for the hard conversations by creating context reduces the chances for having a Chocolate Conversation and allows you to move to a solution. You want to solve these issues early on, before they become a death knell for your company.

There is an old U.S. Army saying, “If it ain’t broke, don’t fix it.” If you read World War II history, from which that expression comes, you’ll find that it’s really shorthand for, “Don’t try to change what you don’t have to because if you do, you may open a can of worms.”

A lot of companies live by that credo. It is seductive for market leaders to look at their past success and become obsessively devoted to it. Once that happens to leaders or companies—and they lose their willingness to look at something new—the people in the company become afraid to speak up. That’s when “Don’t go there” becomes the order of the day. They’ll follow an ill-directed leader down a path to oblivion rather than speak up and lose their jobs. Earlier in the book, we looked at examples of companies, like Kodak, that lost everything by staying on an outdated course while the market was changing around them. Paying attention to what’s going on out there in the world is how companies stay ahead of the relevance curve. Sometimes, to get from where you are to where you need to be, you have to go there; you have to take the hard look, you have to make the difficult choice, you have to adjust in a changing world.

Going there often results in shaking things up. Successful market leaders like Apple do it all the time. Apple is often criticized by market analysts for introducing a new version of a product long before the previous version has shown any sign of faltering. Those analysts fear that Apple leaves too much business on the table; the truth is that Apple never sees the downside of the curve. It is always one step ahead and one new product further into the future. For Apple, the company credo is “newer, faster, better” and “watch out, ’cause here we come,” and that keeps it consistently at the top of the curve. Apple rewards innovation and new thinking—it is always willing to go where no one else will.

For more conservative companies, riding on past success is easier than changing course. The people in those companies who attempt to push the envelope are few in number and are often outmaneuvered by those heavily vested in the status quo.

In which camp does your company fall?

History bears out that the ones who “go there” are the ones who make the big differences in the world. It is always easier to stay where you are, with your current way of doing things and your current way of being. Let’s look at a few who, when the world said, “Don’t go there,” said, “Watch me!” and changed the world:

• Rosa Parks, a woman of color in the pre-civil rights era, refused to give up her seat on a bus to a white person. In a world of segregation and no civil rights for African Americans, Rosa Parks “went there” by sitting silently—and changed the course of the civil rights movement in the United States.

• Mohandas K. Gandhi championed the cause of Indian independence by going to London to sit down with British leaders, something his colleagues found impossible to do. His nonviolent stand for his country and its citizens changed the course of India’s history.

• Winston Churchill was thwarted for years in his efforts to get Parliament to listen to what was going on in Nazi Germany and to the impact it would have on the prospects for peace. He was ignored, ridiculed, and ostracized, but he kept “buggering on.” From our perspective today, it’s a good thing he did. He is applauded by many as having saved civilization.

If You Don’t Go There, Your Customers Will

When you start to talk about the need to transform your company, you must have a very clear awareness of the thing that makes you, you. It’s the unique flavor of your organization that makes you different. Some of the elements of brand touch on it, but it’s broader than that. It’s what you stand for and who you are for your customers.

I’ve talked about Apple as a company that comes out with new products ahead of the curve. But what Apple really is, at its core, is a company that believes in the newest products and the newest designs—and its products flow out of that core commitment to innovation and design.

So, what about a company like Coca-Cola? An iconic brand, recognized around the globe for most of the twentieth century, its mainstay is its popular Coke beverage, which created the company and remains a best-selling product to this day. How does the company stay ahead of the curve and continue to grow?

Coca-Cola had to learn the hard way that it is not simply a beverage company—it is part of the “family,” a lesson its customers taught the company when it lost sight of that. Coca-Cola is not just about what is in the can.

In the 1980s, the Coca-Cola Company experienced pressure in U.S. markets from PepsiCo’s product lines. Coca-Cola sought to get a leg up on Pepsi in 1985 by changing the signature taste of Coke. The “new” Coke was only on the market for seventy-seven days before a huge consumer backlash compelled the company to reinstate the old formula as “Coke Classic.” Executives at Coca-Cola were inundated with letters from consumers that sounded as though a family member had died. The public reacted so strongly to the restoration of the old formula that after twelve weeks Coca-Cola outperformed Pepsi.

The whole event looks like a terrible misstep, at least in hindsight. Coca-Cola executives had run focus groups on the new flavor well in advance of launch and the new product did score higher in blind taste tests. However, in those same focus groups, data had surfaced about the “sacred cow” nature of the Coke brand to consumers. Why didn’t they listen?

Either Coca-Cola executives didn’t know—or they forgot—what the brand meant to its customers. In the competitive rush to get in front of PepsiCo, they got caught up in the heat of the moment and believed that the “new recipe” was the future for Coca-Cola.1

I want to touch on that for a moment. It’s called deal heat. When the top leadership becomes committed to a new idea, it can take on a life of its own that pushes all other considerations out of view. Deal heat becomes a kind of blindness, a faulty worldview that skews the judgment of leadership.

Coke executives got caught up in deal heat and they couldn’t recognize data that pointed to a flaw in the logic that said a new taste was needed. They would not go there. They were convinced they were on to The Next Big Thing, and they got so carried away that no one in the organization had the courage to point out that they weren’t thinking about what Coke meant to customers. So, the customers had to tell them.

What they forgot is that Coke had been part of life for so many; it was often the first soda pop kids had, and adults enjoyed it at sports events and picnics or as a simple beverage with a meal. Customers looked at Coke as part of the family and social landscape.

The way Coke can, and did, grow is by watching the market for changes in consumer behavior and adding to its product line, not changing who it is. As consumers became more fitness and health conscious, Coke came to realize that its real competition wasn’t PepsiCo, it was water. The company added the Dasani brand of water to compete in that marketplace without damaging customer loyalty for Coca-Cola.

At the end of the day, the common worldview of an organization has to be validated by market reality. You could say that, at one point in time, all of these worldviews reflected a market reality:

• We provide the best travel service at the best price: Pan Am

• We provide the best user interface in business computing: Wang Labs

• Consumers know we are the best value for their photo needs: Kodak

• The customer is king: Sears

• The firm led by Mr. Wall Street himself: Lehman Brothers

• The 28,000 percent growth stock: Countrywide Financial

• The business of America is General Motors: GM

Every one of these worldviews was once true—and then the market reality changed and no one inside the organization had the courage to point that out. It was too dangerous to go there. Unfortunately, not going there—not addressing market environment changes or changes in consumer behavior, or even addressing the company’s own internal change in focus—has led to the dissolution or near bankruptcy of these companies. If you don’t go there and address the issues, your customers will—or they’ll leave.

I saw this firsthand at Xerox. We had been a customer-first culture. Customers trusted us. We talked to them about what we were doing and engaged them in our new launches. Employees were encouraged to bring customer concerns out in the open. This was one of the first things we lost, and it did a lot of damage.

When we tried to change Xerox from a product company to a solutions company, we became internally focused. We stopped talking with our customers. Everyone in the company knew that we were losing our way. We hadn’t connected the dots from where we started to where we wanted to go. People were afraid to speak up. I remember having a conversation with a finance executive I was close to on the team. I said, “We have a lot of meetings and we produce a lot of deckware, but do we ever talk to our customers anymore? Do they understand our message?” She said, “I agree, Rose, but we can’t go there.”

Every leader needs to go there in conversations with employees and customers. It’s important to do it in a way that gets things out in the open so you get to a better outcome. This is especially important when your business is at stake. A look at the different fates of Blockbuster and Netflix shows both sides of this equation—one failed while the other went there and won its customers back.

In the video rental boom of the 1980s and 1990s, companies like Blockbuster grew explosively—it was a great niche for more than ten years, and Blockbuster dominated it. However, as I write this book, Blockbuster is bankrupt. When consumers first started renting videos in stores, Blockbuster’s huge selection ensured that even the most popular titles were always in stock. Customers grumbled about late charges—it was the one thing most didn’t like about their favorite video rental chain—but Blockbuster’s sales were strong and its competition was weak. Let’s face it, late fees were a profit center, and the company was lulled into thinking it didn’t have to take the hit and deal with that one complaint.

If you don’t go there, somebody else will. Netflix founder and CEO Reed Hastings recognized that he could build a profitable DVD rental model with no expensive stores and no late fees. Blockbuster’s revenues fell sharply as soon as Netflix began nationwide operations.

Like Kodak, Blockbuster scrambled to compete with the new model, but it addressed the new model too late and with a poorly developed version of what its competitor already had. And top executives at Blockbuster remained unwilling to address the biggest customer complaint: late fees. Blockbuster still operated with the underlying assumption that “late fees won’t drive customers away.”

Employees heard this complaint from customers all the time. I was one of those customers. More than once, I asked several salespeople if late fees were a recurring complaint. One employee admitted to me that he and his colleagues regularly raised the issue with the company because so many people complained. No one listened.

Netflix was born out of what customers didn’t like about Blockbuster. Customers didn’t want to race back to the store to return a film. Paying a late fee on top of the trip added insult to injury.

As a result of customer complaints about Blockbuster’s late fees, Netflix decided to charge a low, flat subscription fee, to operate through mail order, and to never charge a late fee—ever. Netflix saves the overhead that brick-and-mortar stores have by delivering directly to customers’ mailboxes within forty-eight hours of a request. Customers were willing to wait a day or two to receive a movie in the mail rather than burn gas for the trip to and from the video store and have to deal with the hassle of late fees.

When you reach out to your potential customers and uncover their concerns, as Hastings did when he created Netflix, you can establish new standards. You will find that some things you imagine are deal breakers (like that customers have to wait a day or two to get their movie) are really not the customer standards of the moment. The standards Netflix was savvy enough to meet were convenience and no late fees.

When you understand why your competition won’t “go there,” you can find a winning strategy for yourself. Blockbuster assumed that being able to get the product right away was what customers valued most. That standard had changed over the years with higher gas prices and the financial tightening that most consumers were becoming sensitive to. Getting it fast—and spending more in the process—was not the standard that was important anymore.

Don’t make assumptions. Understand what your customers care about. Find this out by talking to them. Listen to your employees. Read blogs. Ask customers what they think. Frustration over late fees and returns was not a secret. Blockbuster refused to “go there,” and Netflix took advantage of that refusal and created an entire business on the back of Blockbuster’s indifference to what mattered to their customers. A lot of companies won’t go there, and it’s a costly mistake.

Netflix was also smart enough to take advantage of Blockbuster’s perceived ambivalence about the customer experience. As I said, the commotion over late fees was no secret. Neither was the fact that Blockbuster seemed to be ignoring this important communication, leaving customers angry and frustrated. So, Netflix again took advantage of its competitor’s indifference and created a customer satisfaction campaign that put the “icing on the cake” in the battle for the movie-rental consumer.

Everybody with a Netflix account is familiar with the letter you get if anything goes wrong. Let’s say that a film arrives that was damaged in shipment. You note this on the Netflix website, and within an hour you receive a note in your e-mail box apologizing and giving you a free rental or some other remunerative thank-you.

You must sustain that vigilance once you create or transform your company to ensure that you are maintaining the standards that your customer expects from you. As great as Netflix was at seizing the opportunity from under Blockbuster and making great strides in customer satisfaction, they were not immune to taking their eye off the ball and creating one of the biggest customer snafus of all time. Which brings us to our second lesson to learn from Netflix.

Even if you’re a forward-looking company with great customer relations, a dedicated high performance workforce, and a killer app, you can still go off the rails very quickly. Netflix decided to split its streaming businesses and its DVD mail order rental businesses in two. The streaming business would be named Qwikster and it would be billed and managed separately. Customers could continue to belong to both Qwikster and traditional non-streaming Netflix, but there would be two fees totaling more than the old fee, and two websites, reflecting the two services.

Customers hated it! The move only served to confuse and disturb customers and investors. Netflix lost 800,000 subscribers in a single month during the promotional period for Qwikster. CEO Reed Hastings responded immediately by “going there” once again—but, this time, perhaps not enough. Rather than launch the new service, Hastings went into print apologizing to customers and saying, “It is clear that for many of our members two websites would make things more difficult, so we are going to keep Netflix as one place to go for streaming and DVDs. This means no change: one website, one account, one password . . . in other words, no Qwikster.” While that announcement may have solved the confusion of two names and two websites, the higher price remained in place—and the company is still paying in loyalty and trust value for some hard feelings with customers who feel that the price increases—for no additional value—was unwarranted and unfair.

It seems that Netflix has weathered the storm—they remain the leader in the movie rental space. However, it has been a hard road to re-enroll some of those customers who felt the price hike was too much at one time. Netflix had good reasons to raise the price—they needed the additional revenue to stay competitive with their offering. Analysts pointed out that the company faced—and continues to face—escalating costs to acquire content for its digital streaming library. Hastings may have taken a lot of the bite out of the controversial move by removing the confusion, but the bottom line is, the price–hike stays.

Be willing to “go there.” Stay in the conversation with your people and your customers. Have the tough conversations. Keep your worldview real and keep testing standards. That’s what it takes to lead change, and that is also why it’s bittersweet. You want to pick the right direction for your company, and the cost of being wrong is steep. If you have authentic conversations with your customers and your employees, you have the foundation for transforming your business. You can try new things and make mistakes, correct them, and stay relevant in a fast-changing world.